Doosan stresses financial soundness

By Kim Yoo-chul

Staff reporter

Doosan Group says it doesn't have any imminent plans to issue new shares from its affiliates.

``There's no need to take big fund-raising action such as selling new shares. Fundamentals of the group's key units are solid enough to buffer a market downturn, if it ever comes to that stage,'' said Shin Dong-gyu, the group's spokesman.

The confirmation came after Choi Jong-il, chief financial officer (CFO) of Doosan Heavy, e-mailed stock analysts and institutional investors, denying speculation that the company is facing liquidity problems stemming from a planned bond issuance.

According to a copy of Choi's letter, which was obtained by The Korea Times, the CFO claimed financial markets misinterpreted the 130 billion won bond issuance plan.

``We regret the recent drops in the share price of Doosan Heavy and other units. The fall was not due to weakening financial soundness,'' Choi told investors in his email missive.

Choi stated Doosan Engineering & Construction has already secured a maximum of 600 billion won cash-equivalent assets, enough to weather any difficulty.

On its desalination business, Choi said its higher competitive edge in related technologies compared to overseas rivals and the overall positive outlook in nuclear and desalination plants will help it keep the momentum.

Despite such a rare and pro-active stance by the top-level executive, market participants still have doubts over the financial soundness of the conglomerate's affiliates.

It might be difficult to see a ``meaningful turnaround'' of share prices anytime soon, some analysts said.

``On a consolidated basis, the portion of a net debt relative to total sales by the group has increased to 42.7 percent,'' Ahn Se-hwan, an analyst at HMC Investment, said.

``But market reactions against the shares are excessive. Bobcat will decide whether it will sell new shares in May 2011, at the earliest,'' Jeong Dong-ik, an analyst at Hi Investment, said.