Kumho may turn over Daewoo Engineering managerial rights to investors: sources

SEOUL, Dec. 2 (Yonhap) -- South Korea's troubled Kumho Asiana Group has proposed
turning over the managerial rights of Daewoo Engineering & Construction Co. to
financial investors, industrial sources said Wednesday.
Sources said Kumho Asiana met with 18 financial institutions on Tuesday and asked
to delay the put back option for a month, adding it may opt to give up control of
the builder that it wants to sell.
A put back option could force the business group to buy back as much as a 39
percent stake in the builder, sources said. Financial institutions are scheduled
to exercise the option on Dec. 15.
"If investors carry out the put back option, it could have a negative impact on
the sale of Daewoo Engineering & Construction that is currently underway, so we
have asked for a delay," a conglomerate insider said.
In addition, the group proposed a plan to optionholders to transfer its
managerial rights over Daewoo Engineering & Construction by giving a 18.6 percent
stake in the builder owned by its smaller construction unit Kumho Industrial Co.
If Kumho Asiana gives Kumho Industrial's stake to the financial investors, the
latter's stake in the builder will increase to 57.6 percent.
The sources, meanwhile, said it is unclear whether the financial investors
accepted Kumho Asiana's proposal.
On Nov. 23, Kumho Asiana said it had picked two foreign funds -- the Middle
East-based Jabez Partners and TR America consortium of the U.S. -- for a 50
percent stake plus one share in the local builder, estimated at 3.3 trillion won
(US$2.8 billion).
The South Korean group bought a 72.11 percent stake in Daewoo Engineering &
Construction in June 2006 for 6.42 trillion won, 3.5 trillion won of which was
funded by banks and other financial firms.
At the time, the group offered a put back option, under which it promised the
financing providers it would buy back the builder's shares by December 2009 if
the stock price fell below 31,500 won.
ksnam@yna.co.kr
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