Doosan speeds up disposal of affiliates but future still in the dark

Doosan logo in front of the Doosan Tower in Seoul. Yonhap

By Kim Hyun-bin

Doosan Group is trying to speed up the process of raising 3 trillion won through the selling off affiliates and assets in order to get a state bailout to save its flagship power equipment unit. The move puts Doosan's future at risk as it sells off its few remaining profitable businesses.

Doosan Heavy Industries sold its Club Mow Country Club last month and used the proceeds from the sale to pay back loans worth 120 billion won ($100.8 million) to creditor banks.

Doosan Group also sold VC Neoplux to Shinhan Financial Group for 73 billion won.

The group is currently in the process of selling Doosan Solus, Doosan Tower and Doosan Engineering & Construction (E&C).

It is currently negotiating with Mastern Investment Management over the sale of Doosan Tower; and Skylark Investment in offloading the group's electric and bio material developer Doosan Solus. Once a preferred bidder is selected for Doosan E&C, industry watchers believe a deal could be reached before the end of the year.

Doosan Heavy may be able to recapitalize as investors are keen on the company's wind power business, which has been picked as a main growth engines in the renewable energy sector. Doosan Heavy's stock prices plummeted to 2,395 won in March but was steady at around 16,600, Friday.

"By looking at the current IPO market fever and trend it doesn't seem like a problem for Doosan Heavy to acquire 1 trillion won," said Lee Tae-hoon, an analyst at eBest Investment & Securities.

Five of Doosan's assets are being disposed of, however, Doosan Mottrol BG and Doosan Infracore are facing problems. The union of Mottrol ― a developer of oil pressure machines for the defense industry ― strongly opposes the selection of Morgan Stanley PE as preferred bidder.

"If the company is sold off to a foreign private equity fund the defense and civilian business sectors will be divided which will result in employment insecurity and a threat to the livelihood of employees," a union official said. "We strongly oppose the sell off to Morgan Stanley."

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