KDB drops POSCO from Daewoo Shipbuilding bidding

SEOUL, Oct. 16 (Yonhap) -- The main creditor of Daewoo Shipbuilding & Marine Engineering Co. said Thursday it will reject the bid for the shipbuilder by POSCO Co., the world's fourth-largest steelmaker, as part of its efforts to "secure fairness and transparency of the sale process."

The state-run Korea Development Bank's (KDB) rejection came as POSCO has sought
to make a solo bid for a controlling stake in Daewoo Shipbuilding since GS Group
abruptly pulled out of its consortium with POSCO earlier this week.
POSCO and GS, an energy and retail conglomerate, jointly submitted a final bid to
buy a 50.4 percent stake in the world's No. 3 shipyard on Monday, but GS dropped
out hours after the final offer was made.
KDB, which is managing the sale of Daewoo Shipbuilding, said that the solo bid by
the steelmaker resulting from GS's departure could put the asset sale's fairness
into jeopardy, and declared the POSCO's bid invalid.
KDB also said it will announce a preferred bidder, which will be one of the other
two other bidders -- Hyundai Heavy Industries Co. and Hanhwa Group -- on Oct. 24.
Some analysts say the Daewoo Shipbuilding stake may fetch as low as US$4 billion,
far below the earlier estimate of $7 billion, made when potential bidders were
invited to submit their preliminary bids in late August.
The transaction, if successful, would be one of the biggest asset sales by South
Korea's state-run financial institutions, which took over a number of indebted
private companies in the wake of the 1997-98 Asian financial crisis.
For weeks officials, at KDB have indicated that bids for Daewoo Shipbuilding
would fail if offering prices were too low.
Foreign investors were banned on security grounds from bidding for Daewoo
Shipbuilding, which manufactures submarines for the South Korean Navy.