By Kim Yoo-chul, Oh Young-jin
Staff Reporters
Will the Korea Development Bank (KDB) delay its sale of Daewoo Shipbuilding and Marine Engineering (DSME)?
The four declared bidders have said that they will "mark to the market" in deciding their bids to be made Oct. 13, but declined to say the premium they will pay on top of the share price for management control.
Last Friday, Daewoo's share price closed at 26,150 won, down from the 48,000 won range in August, when KDB and Korea Asset Management Corp. (KAMCO), the main creditors, announced their plan to sell the shipyard.
Executives of the four bidders ― POSCO, GS, Hanwha and Hyundai Heavy ― said that it was only natural for write-in bids to reflect the market situation.
"We can't say whether our price will be different from that in August," a senior Hanwha executive said. "It comes down to the intrinsic value of the company," he said, adding this view would be shared Hanwha's competitors.
Reflecting a stiff drop in its share prices, the price for a controlling stake of Daewoo is now estimated at between five to six trillion won, down from the six to eight trillion won in August.
Apparently aware of the shrinking market value of the company, Yonhap News Agency reported without attribution that KDB was considering not designating a preferred negotiator, if the bid was too low.
"The outlook for stock markets is not good so I wouldn't be surprised to see KDB delay the Daewoo sale, if the terms prove to be less than desirable," an analyst said on condition of anonymity.
Neither KDB public relations officer nor its CEO returned a phone call inquiry.
Meanwhile, POSCO, the virtual leader in the race, cancelled a scheduled board meeting with its overseas directors, while GS Holdings and Hanwha are both seeking to forge a partnership with the Daewoo employees' fund.
"It will be interesting to see the bidders' next step in seeking a strategic investor to lessen the financial outlay," a source from DSME told The Korea Times, Sunday.
The National Pension Service had been expected to participate as a strategic investor in buying DSME. Other buyers were keen to draw in the NPS fund, which previously said it could invest up to 1.5 trillion won in the deal. However, it scrapped the plan as the global economic turmoil could dent potential returns.
Domestic banks have also been ordered to refrain from acquisition-related lending amid the continuing woes on global financial markets.
Hanwha and GS Group have approached the Daewoo employees' fund committee to suggest forming a consortium with it.
"We will meet Hanwha and GS Group, separately, sometime this week to look at ways for a possible tie-up," Kwon Seong-tae, the chief of the committee said, adding the employee fund was aiming to secure a 3 percent stake in Daewoo after the acquisition is finalized.
Industry watchers say Hanwha is still in contact with the NPS by promising a sizable investment return. The country's 13th largest conglomerate needs the pension service to clear worries over its weakened financing capability.
"Although the NPS departed from the deal, Hanwha is still talking to and guaranteeing a 10 percent investment return year-on-year," a source from GS Group said.