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Shipbuilder stake sale

Hanjin Heavy set for sale to Dongbu-led consortium

By Dec 22, 2020 (Gmt+09:00)

Hanjin Heavy Industries' Yeongdo Shipyard in Busan, South Korea
Hanjin Heavy Industries' Yeongdo Shipyard in Busan, South Korea

A South Korean consortium led by construction firm Dongbu Corp. has been picked as the preferred negotiator to buy a controlling stake in cash-strapped Hanjin Heavy Industries & Construction Co.

According to Hanjin Heavy on Dec. 22, its main creditor Korea Development Bank (KDB) and other local creditors have agreed on the consortium of Dongbu, Korea Real Estate Investment & Trust Co. (KREIT), Opus Private Equity and NH Private Equity as their top negotiator choice among three contending groups.

Another bidding consortium, led by SM Line Corp. has been named a runner-up, meaning they are first in line in case talks with the Dongbu consortium breaks down.

If the sale goes through, the mid-sized shipbuilder will find a new owner, four years after it entered a debt restructuring agreement with creditors in 2016.

Sources said the creditors had been divided as some private lenders put bidding price as their top priority for the selection of the preferred negotiator.

The Dongbu consortium is said to have offered about 400 billion won ($362 million) for the majority stake up for sale.

The third consortium of KDB Investment and Keistone Partners offered the lowest bid, according to the sources.

SALE PROCESS COMES AMID REBOUND IN SHIPPING INDUSTRY

Hanjin Heavy was put up for sale in September as it was reeling from financial difficulties after its Subic shipyard in the Philippines posted massive losses in the past few years due to a sharp fall in new orders given a protracted slump in the global shipbuilding industry.

Through a debt-to-equity swap, the state-run KDB holds 16.14% of Hanjin Heavy, followed by Woori Bank (10.84%), Nonghyup Bank (10.14%), Hana Bank (8.9%), Kookmin Bank (7.09%) and the state-run Export-Import Bank of Korea (6.86%).

The Philippines-based lenders, including Rizal Commercial Banking Corp., own a combined 20.01% stake in Hanjin Heavy.

The sale process comes as Korea’s shipbuilding sector is recovering from a years-long slump thanks to a rebound in the global shipping industry.

Write to Ri-Ahn Kim at knra@hankyung.com

In-Soo Nam edited this article.
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