KDB drops shipyard deal with Hanwha

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SEOUL, Jan. 21 (Yonhap) -- State-run Korea Development Bank (KDB) decided
Wednesday to scrap a deal to sell a controlling stake in Daewoo Shipbuilding &
Marine Engineering Co. to Hanwha Group, bank officials said.

The lender's board of directors made the decision to abort what would have been
the shipbuilding industry's largest acquisition to date, they said.
"The board of directors reached a consensus that Hanwha's funding plan was not
realistic and its proposal to buy a part of the stake was not acceptable," said
an official at KDB.
Hanwha signed a preliminary deal with KDB on Nov. 14 to buy a 50.4-percent stake
in Daewoo Shipbuilding & Marine Engineering Co. without a due diligence due to
opposition from the shipbuilder's union.
But a self-imposed year-end deadline to seal the deal was delayed by one month as
Hanwha demanded it be allowed to pay the 6.3 trillion won (US$4.56 billion) for
the stake in installments, citing difficulties in raising funds amid a credit
crunch.
KDB last week urged Hanwha to come up with a detailed and realistic plan for
funding the acquisition and threatened to scrap the deal if Hanwha fails to
finalize it by the end of the month.
There has been growing speculation that talks on the sale are likely to break
down as KDB is unlikely to revise terms of the sale.
KDB proposed to set up a private equity fund with institutional investors to buy
assets offered by Hanwha Group instead of accepting Hanwha's demand for payment
in tranches. Hanwha put down a 300 billion won deposit to make good on its
promise to complete the Daewoo deal.
sam@yna.co.kr
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