'ADIA Not Interested in Daewoo'

By Kim Tae-gyu
Staff Reporter

The auction for Daewoo Engineering and Construction, Korea's third-largest builder and held by the cash-strapped Kumho Asiana Group, may fail due to lack of interest.

A source claimed Wednesday that the Abu Dhabi Investment Authority (ADIA), which has been touted as the top contender to buy Daewoo Construction, is indifferent to the Seoul-based builder.

``Daewoo is not something that the ADIA is looking at. The ADIA has no interest in the firm,'' said a person who is close to the sovereign-wealth fund owned by Abu Dhabi of the United Arab Emirates.

``For the sellers, it would be helpful to put the ADIA on the list of potential buyers to get higher prices. But the ADIA is not involved this time,'' he said.

This means that the auction on Daewoo might collapse as, out of the four short-listed candidates, only the ADIA consortium had been reported to have sufficient capacity to snap up Daewoo.

``We should wait until the deadline of the final bidding, which falls next week. But if the ADIA does not participate in the bidding, it is bad news for Kumho Asiana,'' said Yoon Jin-il, an analyst at IBK Securities.

``Another downside is the trade union of Daewoo Construction, which opposes acquisition of the company by foreign funds,'' he said.

Indeed, Daewoo's unionists have been dead set against foreign funds.

``All the potential buyers seem to be funds, which are looking only for short-term gains by purchasing Daewoo. In this climate, we hope that this auction will end in failure,'' Daewoo trade union leader Kim Wook-dong said.

``Kumho had better try to find some legitimate buyer who has a long-term vision for the development of Daewoo Construction,'' he said.

But the hitch is that Kumho needs to sell off Daewoo right away in order to finance a put-back option that will mature next month.

Kumho funneled 6.4 trillion won in 2006 to acquire a 72.1-percent stake of Daewoo with more than half the amount generated by 18 financial investors.

While making efforts to attract the investors, including the country's leading lender Kookmin Bank, Kumho promised to buy back Daewoo stocks at 31,500 won a share this December, expecting the equities value would jump above that level.

But the global financial crisis last year pulled down the share prices below the 20,000 won mark and they now move in the vicinity of 13,000 won. Hence, Kumho would have to buy the 13,000 won shares at 31,500 won.

When contacted, the Korea Development Bank, the underwriter of the deal, Kumho Asiana Group and Daewoo Construction refused to make any remarks, citing their company policies. The ADIA also did not issue any comments on the issue.

voc200@koreatimes.co.kr