By Lee Hyo-sik
The Korea Development Bank (KDB) plans to sell its controlling stake in Daewoo Engineering & Construction (E&C) early next year as the main creditor bank seeks to retrieve its investment as early as possible amid increasingly volatile market conditions.
The sale is expected to attract keen attention, particularly from Middle East-based investment funds, because of Daewoo's extensive knowhow and expertise in the construction of refineries and other industrial facilities.
According to KDB officials, Monday, the bank's board of directors will hold a meeting this week and approve a plan to sell a 50.75 percent stake in Korea's fourth-largest builder by construction orders. A private equity fund (PEF) set up by KDB holds the stake.
The bank will evaluate conditions by the end of this year and issue a sales notice in early 2017.
"The PEF is scheduled to expire next October so we need to initiate the sales procedure early next year to recoup our investment in time," a KDB official said. "The issues that the board of directors will deal with are not yet fixed at the moment, but the chances are they will likely discuss the sale of Daewoo E&C."
Given the builder's share price is hovering around 6,400 won ($5.5), the 50.75 percent stake is valued at about 1.3 trillion won. Including management premiums, KDB expects the stake sale could reach at least 1.5 trillion won.
In 2010, KDB acquired Daewoo E&C for 2.2 trillion won from Kumho Asiana Group, which was crumbling under mounting debt. The bank later injected an additional 1 trillion won into Daewoo when the latter issued new shares.
KDB has decided to go ahead with the sale even though it cannot recover all the money it invested.
Given the sales, foreign investment funds with ample liquidity will likely bid for Daewoo, while most of Korea's large business groups have been reluctant to take over construction firms in recent years amid the continued global construction slump.
The chances are that Daewoo could follow in the footsteps of Ssangyong Engineering & Construction, which was acquired by the Investment Corporation of Dubai in early 2015.
A Daewoo E&C official said the company has been taking steps to strengthen its core competence and improve its bottom line.
"The sale has long been planned," the official said. "Since new CEO Park Chang-min took the helm last month, the company has been taking measures to restructure itself into a more efficient organization. Under any circumstances, we will continue to do what we do best to become a globally-competitive builder."
Daewoo is set to slash its workforce and restructure its business units to bolster financial soundness through introducing a voluntary retirement program and overhauling unprofitable divisions.
The builder had sales of 9.88 trillion won in 2015 with a 334.6 billion won operating profit.
The Korea Development Bank (KDB) plans to sell its controlling stake in Daewoo Engineering & Construction (E&C) early next year as the main creditor bank seeks to retrieve its investment as early as possible amid increasingly volatile market conditions.
The sale is expected to attract keen attention, particularly from Middle East-based investment funds, because of Daewoo's extensive knowhow and expertise in the construction of refineries and other industrial facilities.
According to KDB officials, Monday, the bank's board of directors will hold a meeting this week and approve a plan to sell a 50.75 percent stake in Korea's fourth-largest builder by construction orders. A private equity fund (PEF) set up by KDB holds the stake.
The bank will evaluate conditions by the end of this year and issue a sales notice in early 2017.
"The PEF is scheduled to expire next October so we need to initiate the sales procedure early next year to recoup our investment in time," a KDB official said. "The issues that the board of directors will deal with are not yet fixed at the moment, but the chances are they will likely discuss the sale of Daewoo E&C."
Given the builder's share price is hovering around 6,400 won ($5.5), the 50.75 percent stake is valued at about 1.3 trillion won. Including management premiums, KDB expects the stake sale could reach at least 1.5 trillion won.
In 2010, KDB acquired Daewoo E&C for 2.2 trillion won from Kumho Asiana Group, which was crumbling under mounting debt. The bank later injected an additional 1 trillion won into Daewoo when the latter issued new shares.
KDB has decided to go ahead with the sale even though it cannot recover all the money it invested.
Given the sales, foreign investment funds with ample liquidity will likely bid for Daewoo, while most of Korea's large business groups have been reluctant to take over construction firms in recent years amid the continued global construction slump.
The chances are that Daewoo could follow in the footsteps of Ssangyong Engineering & Construction, which was acquired by the Investment Corporation of Dubai in early 2015.
A Daewoo E&C official said the company has been taking steps to strengthen its core competence and improve its bottom line.
"The sale has long been planned," the official said. "Since new CEO Park Chang-min took the helm last month, the company has been taking measures to restructure itself into a more efficient organization. Under any circumstances, we will continue to do what we do best to become a globally-competitive builder."
Daewoo is set to slash its workforce and restructure its business units to bolster financial soundness through introducing a voluntary retirement program and overhauling unprofitable divisions.
The builder had sales of 9.88 trillion won in 2015 with a 334.6 billion won operating profit.
![[INTERVIEW] How AmazeVR revolutionizes aespa's LYNK-POP concert](https://img.koreatimes.co.kr/upload/thumbnailV2/4431833759c44bdaa414cb314e90f2fe.jpg/dims/resize/178/optimize)
![[REVIEW] Musical 'Monte Cristo' returns with riveting tale of vengeance, love](https://img.koreatimes.co.kr/upload/thumbnailV2/3934be1fa6844478b619a015d610bc5b.jpg/dims/resize/178/optimize)
![[INTERVIEW] Meet the man behind giant rubber ducks that once took over Seoul](https://img.koreatimes.co.kr/upload/thumbnailV2/df32c60c8204448e98ccdb9841366bec.jpg/dims/resize/178/optimize)
