KDB announces termination of shipyard sale deal

SEOUL, Jan. 22 (Yonhap) -- The state-run Korea Development Bank (KDB) announced
Thursday that it has scrapped a deal to sell a controlling stake in Daewoo
Shipbuilding & Marine Engineering Co. to Hanwha Group.
Rejecting Hanwha's demand for the revision of sale terms, KDB's board decided
Wednesday to abort what would have been the shipbuilding industry's largest
acquisition to date.
The state lender will also seize a deposit of 300 billion won (US$220 million)
that Hanwha put up for the deal.
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 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 had been growing speculation that talks on the sale would break down if KDB
didn't revise terms of the sale.
Hanwha wanted to cut the price tag as shares of Daewoo Shipbuilding had halved
compared with six months ago, hit by global financial turmoil and concerns about
a decline in shipbuilding orders.
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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