By Kim Yoo-chul
Doosan Group said Monday that it will inject a total of 1 trillion won into its troubled construction subsidiary Doosan Engineering and Construction (E&C) through a capital increase and the sale of real estate assets.
The group said that under the emergency measure, the construction firm will sell shares worth some 450 billion won and sell some of its core assets to raise 550 billion won.
Doosan Heavy’s profitable turbine division will be moved to Doosan E&C as another step to help the group’s construction unit stabilize its financial soundness, the statement read.
Doosan Heavy owns 72.74 percent of Doosan E&C. The announcement came after approval for the move from a board meeting.
Market analysts say the plan is aimed at easing liquidity problems at the company as it struggles with real estate project financing investment amid ongoing weakness in the local construction market.
``Doosan E&C will find new business momentum by running the turbine business. The group won’t see any liquidity-related problems,’’ said group spokesman Lee Jay-hyung.
``The focus now is on whether the funding plan goes as smoothly as hoped, and whether or not there is sufficient demand in the market,’’ said Shinyoung Securities analyst Han Jong-hyo.
A severe and prolonged downturn in the Korean property market has dealt serious blows to many of the country’s smaller construction companies, which have seen massive losses from investment related to real estate project financing.
Deepening fears about the sector forced the Korean government to unveil support measures aimed at helping financially distressed builders recover. But those steps have not been effective.