Hanwha's takeover of Daewoo Shipbuilding can be delayed one month: KDB

(ATTN: UPDATES with more quotes from KBD's executive director and reactions from
Hanwha Group in paras 9-11)
SEOUL, Dec. 28 (Yonhap) -- South Korea's state-run Korea Development Bank (KDB)
said Sunday it can delay full implementation of a deal to sell Daewoo
Shipbuilding & Marine Engineering Co. to Hanwha Group by one month, easing
concerns that the contract may be derailed.
Hanwha signed a preliminary deal in November, with KDB to buy a 50.37 percent
stake in the world's No. 3 shipbuilder for an estimated 6 trillion won (US$4.6
billion), and full payment to be made by late March. Citing worsening financing
conditions, however, Hanwha asked KDB on Tuesday to extend the payment deadline
or accept payment in installments.
On Friday, Hanwha said it is necessary to conduct due diligence on the
shipbuilder before signing a formal takeover deal due on Monday, hinting at its
hope to delay the deal.
"The takeover contract should be signed on Monday in accordance with the
preliminary agreement. But given the impact of the successful completion of the
deal on the local economy, KDB can delay exercising its rights until Jan. 30,
2009," KDB said in a statement.
These rights include penalizing Hanwha for failing to implement its part of the
deal on pre-set dates.
In return for the delay, KDB requested that Hanwha do its best to raise money by
selling its own assets.
"But if the Hanwha consortium asks KDB to buy part of the conglomerate's assets
at reasonable prices and conditions, KDB could consider cooperating in Hanwha's
efforts to raise funds," the lender said. The consortium consists of Hanwha
Group., Hanwha Chemical Corp. and Hanwha Engineering & Construction Corp.
KDB, however, added that it will exercise its rights as a seller, including
taking guarantee deposits even before the deadline if Hanwha does not fulfill its
requirements.
The lender stressed that while it is willing to give more time, it could not
accept Hanwha's offer to make payment in installments or adjust the takeover
price.
"Although KDB could buy part of Hanwha Group's assets, the takeover price will
remain intact," Chung In-sung, a senior executive director at KDB, told
reporters. "Hanwha also should make full payment by the end of March as planned.
Meanwhile, Hanwha welcomed KDB's decision, saying that KDB seemed to consider
financing difficulties facing Hanwha amid the worsening financial markets. "But
additional negotiations are necessary to address the current obstacles
surrounding the sale of Daewoo Shipbuilding."
Hit by global financial turmoil, Hanwha has been facing difficulty in raising
money through the sale of its holdings in real estate and Korea Life Insurance,
the nation's No. 2 life insurer, market watchers say.
Hanwha, with interests from explosives to shopping malls, is seeking to expand
into new businesses such as oil tankers and deep-sea drilling structures to boost
earnings growth.
Daewoo Shipbuilding was placed under a debt rescheduling program in August 1999
after its parent Daewoo Group collapsed under heavy debt.
sooyeon@yna.co.kr
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