By Lee Hyo-sik

Creditors of Ssangyong Engineering & Construction (E&C) have decided to relinquish a controlling stake in the company by means of a private contract after open bids failed to achieve this end.

A German engineering firm, which took part in three previous bids, has emerged as the most likely to acquire one of Korea’s largest builders, according to industry officials Monday.

The Korean Asset Management Corporation (KAMCO), the largest stakeholder which owns a 38.75-percent stake in Ssangyong E&C, has abandoned the open competition, designed to raise sales prices, after its third attempt to sell the builder in an open bid foundered on June 15 with only one entity willing to take it over.

At least two entities are required to take part in open bidding. But in the three held over the past six months, only M+W, a global engineering and construction firm based in Germany, participated in the KAMCO-led bid aimed at disposing of a 50.02 percent stake in Ssangyong.

Given this, when KAMCO restarts the bidding process later this month, the German engineering firm will likely be the sole entity interested in the builder. In 2010, M+W Group also teamed up with Hyundai Group in a bid to acquire Hyundai Engineering & Construction

``Given that the German company was the only bidder in all three previous rounds, KAMCO does not have any other choice but to talk with M+W Group in a private format if it wants to dispose of Ssangyong stakes,’’ an industry official said.

Following the 1997-98 Asian financial crisis, Ssangyong E&C and other Ssangyong Group affiliates faced deep financial trouble under mounting debts. KAMCO and other creditors injected capital to rescue the builder in return for company shares in 1999. Since then, creditors have been attempting to dispose of the company.

The official said the German company is interested in acquiring Ssangyong for its state-of-the-art engineering know-how and broad global network.

``Ssangyong E&C has an extensive overseas network and is capable of constructing high-rise structures like the Marina Bay Sands Hotel in Singapore. It has also been undertaking a wide range of infrastructure development projects in the Middle East and other parts of the world. The firm has an excellent track record,’’ he said.

Another industry official said the builder has been performing well over the past few years, despite the continued sluggish real estate market here. ``The company has established a strong foothold abroad. Its financial standing has improved significantly. Given this, it shouldn’t be sold under unfavorable terms.’’

If M+W is not willing to pay a fair price, creditors should postpone the sale and instead seek ways to help the builder survive on its own, the official said.

``The builder has and will secure more construction orders from abroad. It is not desirable for the company to be sold in a hurry. With no viable buyers, creditors then should put off the sales until the global economy recovers,’’ he said.