Daewoo Engineering shares soar on new financial deal

By Nam Kwang-sik
SEOUL, June 2 (Yonhap) -- Shares of Daewoo Engineering & Construction Co., a
construction unit of South Korea's Kumho Asiana Group, shot up Tuesday on news
the group will have to sell the cash-strapped builder unless it finds new
investors.
On Monday, Kumho signed a deal with its main creditor, the Korea Development Bank
(KDB), to seek new financial investors by the end of July to fund the troubled
builder.
Under the deal, Kumho should sell Daewoo Engineering to a fund created by KDB if
it fails to find new investors.
The group has been plagued by concerns it might undergo a severe cash shortage as
a result of its purchase of Daewoo Engineering and Korea Express.
Kumho bought the country's largest builder for 6.43 trillion won (US$5.19
billion) in 2006 and the country's biggest logistics company, Korea Express, for
4.1 trillion won early last year.
At the end of July of last year, Kumho announced a set of measures to raise about
4.57 trillion won by selling properties and securities of its affiliates to
dispel investors' jitters over its financial health.
However, the global financial crisis impeded the group's plan to secure liquidity
leading up to the Kumho-KDB deal.
Daewoo Engineering soared up to the daily limit of 15 percent to 12,800 won on
the bourse earlier in the day.
ksnam@yna.co.kr
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