Subscribe
E-Paper
 |
| Korea Development Bank (KDB) Chairman and CEO Kang Seog-hoon speaks during a press conference on the planned sale of Daewoo Shipbuilding & Marine Engineering (DSME) at KDB headquarters in Yeouido, Seoul, Monday. Yonhap |
By Yi Whan-woo
Hanwha Group will take over debt-ridden Daewoo Shipbuilding & Marine Engineering (DSME) as the two firms signed a preliminary investment deal on a conditional sale, Korea Development Bank (KDB) said Monday.
The state-run bank, which is the main creditor and largest shareholder of DSME with a 55.7 percent stake, said Hanwha Group signed a memorandum of understanding (MOU) to acquire a 49.3 percent stake in the ailing shipbuilder.
Under the MOU, the group's subsidiaries will participate in DSME's 2 trillion won ($1.39 billion) rights offering for a 49.3 percent stake and managerial control. Hanwha Aerospace will fund 1 trillion won, Hanwha Systems 500 billion won, Hanwha Impact Partners 400 billion won, and three subsidiaries of Hanwha Energy will fund 100 billion won to participate in the rights offering.
After the rights issue, KDB will still hold a 28.2 percent stake in DSME.
 |
| A view of Daewoo Shipbuilding & Marine Engineering's (DSME) main dockyard on Geoje Island, South Gyeongsang Province / Yonhap |
"We've judged having a competent private party to run DSME will fundamentally resolve financial problems concerning the firm, and accordingly, we have been searching for a qualified candidate since January," KDB Chairman and CEO Kang Seog-hoon said during a press conference at the bank's headquarters in Yeouido, Seoul.
The month of January is when the planned merger of DSME by Hyundai Heavy Industries of Korea, the world's largest shipbuilder, failed due to objections from the European Union.
The botched deal compounded woes for KDB, which pumped trillions of won in taxpayers' money into the ailing shipbuilder for nearly the past 22 years.
"Under the circumstances, we've been searching for a candidate that is proven in terms of management and financial soundness and that's when Hanwha Group expressed its interest in buying DSME," Kang said.
He added that the entire businesses of DMSE will be merged into Hanwha Group if there are no better offers, instead of breaking up the shipbuilder's defense and civilian shipbuilding units.
A possible break-up and split sale of DSME has been one of KDB's options to speed up the sale.
However, the plan was disputed due to security concerns, while physically dividing shipyards shared by the defense and civilian units is virtually impossible.
The possible acquisition of DSME by Hanwha Group is expected to maintain a three-way rivalry including Samsung Heavy Industries, in the Korean shipbuilding industry.
The defense units of DSME are expected to bolster Hanwha Group's push to nurture weapons and other defense manufacturing operations as its key business.
The shipbuilder has been suffering operating losses, including a loss of 1.7 trillion won in 2021 and nearly 600 billion won in the first half of 2022.
This year's loss was partly attributed to a 51-day strike by subcontracted workers at DSME during the summer at the shipbuilder's main dockyard on Geoje Island, South Gyeongsang Province.
The announcement of the deal boosted DSME shares, which closed at 24,950 won on Monday, up 13.41 percent from the previous session. Shares of Hanwha Group subsidiaries participating in the rights issue, meanwhile, tumbled. Hanwha Aerospace dropped 10.8 percent to close at 66,100 won, while Hanwha Systems dipped 7.17 percent to 12,300 won.
