Korea Development Bank (KDB) has confirmed that it will buy a 50% stake in Daewoo Engineering & Construction (E&C) without any other investor, reported the JoongAng Daily.
The report cited the state-run bank, which stated yesterday that it has decided to acquire Daewoo E&C solely via its own private equity funds and special purpose company, without an external investor.
KDB is planning to raise KRW 3tn to KRW 3.5tn (USD 3bn) via the private equity fund and borrow KRW 1tn (USD 856m) via the special purpose company. A spokesperson was cited as saying that it may take longer to finalize the deal than earlier expected due to the plan change.
Daewoo Engineering’s shares have recently traded at around 10,000 won per share, a decline from 13,000 won earlier in the year. Its share price yesterday closed up 3.6 percent at 10,350 won on news of KDB’s bid.
KDB now plans to buy a 50 percent stake plus one share in Daewoo E&C.
The shares to be acquired by KDB included a 39.6 percent stake held by creditors of Kumho Asiana who acquired the Daewoo E&C shares after Kumho underwent restructuring in December. The remaining shares to be sold to KDB include a 5.61 percent stake held by Kumho Tire and a 4.49 percent stake held by Kumho Petrochemical.
Kumho bought 72 percent of Daewoo Engineering in 2006 for 6.4 trillion won from creditors of the construction company, including KDB. But the acquisition proved to be problematic for Kumho, since it raised the group’s debt burden to a level that it was unable to sustain.
According to an earlier report, KDB planned to acquire the stake from Kumho Asiana by the end of August.
Source: JoongAng Daily
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