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Sale of 3 midsized shipbuilders in final stage

This photo, provided by Daesun Shipbuilding Engineering Co. on Dec. 29, 2020, shows a shipyard of the shipbuilder in Busan, 453 kilometers southeast of Seoul. (Daesun Shipbuilding Engineering Co.)
This photo, provided by Daesun Shipbuilding Engineering Co. on Dec. 29, 2020, shows a shipyard of the shipbuilder in Busan, 453 kilometers southeast of Seoul. (Daesun Shipbuilding Engineering Co.)
The sale of South Korea's three midsized shipbuilders is in the final stage despite concerns that they may have trouble in finding viable investors due to a slump in the shipbuilding industry and the COVID-19 outbreak.

The midsized shipbuilders -- Hanjin Heavy Industries & Construction Co., STX Offshore & Shipbuilding Co. and Daesun Shipbuilding Engineering Co. -- were put up for sale last year due to their financial trouble since the 2008 global financial crisis.

Creditors of Daesun Shipbuilding Engineering completed the deal to sell the shipbuilder with local steelmaker Dongil Steel Co. at the end of last year, while creditors of Hanjin Heavy Industries & Construction and STX Offshore & Shipbuilding have yet to finalize their deals after picking the preferred bidders for the shipbuilders.

In late November, creditors of STX Offshore picked a consortium comprising local private equity fund KH Investment (KHI) and United Asset Management Company (UAMCO), South Korea's biggest bad debt clearer.

Creditors of STX Offshore and the consortium were slated to strike the formal deal for the stake in the shipbuilder in December, but it has been delayed.

"The formal deal did not fall through, but some reasons delayed it," Kong Doo-pyung, a spokesman for STX Offshore, said Thursday, without revealing the reason.

On Dec. 22, creditors of Hanjin Heavy Industries & Construction named a consortium led by construction company Dongbu Corp. as its preferred bidder for an 83.45 percent stake in the company.

The decision has faced stiff opposition from the Busan government and civic groups in Busan, 453 kilometers southeast of Seoul, where Hanjin Heavy Industries & Construction's shipyard is located, due to concerns that the construction company may turn the shipyard into an apartment complex.

Two days later, the consortium said it will keep running the shipyard, brushing off the concerns.

The stake sale is expected to be finalized early this year after obtaining approval from authorities, including South Korea's arms procurement agency, Defense Acquisition Program Administration, as the shipbuilder has been fully dedicated to building battleships.

The Export-Import Bank of Korea (Eximbank), the main creditor of Daesun Shipbuilding Engineering, finalized a 160 billion won ($157 million) deal with Dongil Steel Co. to sell the midsized shipbuilder on Dec. 29.

Dongil Steel promised to keep up the shipbuilding business and hire all employees of the shipbuilder, Eximbank said. (Yonhap)
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