Hong Kong-based private equity firm VVL expressed its willingness to participate in a bidding to take over Ssangyong Engineering & Construction Co., industrial sources said Sunday.

If successful, VVL will become the largest shareholder of the Korean builder firm, replacing the state-run Korea Asset Management Corp., or KAMCO, Ssangyong’s current largest shareholder.

Ssangyong E&C has been accepting applications from developers here and abroad since last November. The bid will most likely close before Feb. 22, the day when KAMCO is required to return its stakes to the government, an industrial source said.

“The proposal is only the beginning of the whole process,” the source said. “KAMCO and Ssangyong suggested that firms that pass the basic standards can launch corporate financial inspection right away.”

So far two developers, VVL and a Luxembourg-based developer firm, have passed the evaluation and conducted corporate inspections in December 2012, but only VVL submitted a proposal to Ssangyong.

According to an inside source, the Hong Kong-based firm proposed $250 million, or about 265 billion won, for the recapitalization deal to acquire an approximately 65 percent stake of Ssangyong E&C, which currently holds capital worth about 150 billion won.

VVL has requested a debt-for-equity swap, the source said, to Ssangyong creditors’ dismay.

“Ssangyong and KAMCO officials want to extend the proposal term for as long as possible for a broader range of options,” the source said. “Some Korean firms are interested in the bid as well.”

Ssangyong and KAMCO expect that, in addition to the eight firms that turned in letters of intent in 2012, more firms are bickering about circumstances to jump into the bid and make proposals.

Setting out as an engineering and construction firm in 1977, Ssangyong E&C launched its first overseas branch in Kuwait in 1978. The company now has two home offices and 13 overseas branches.

In the wake of the 1997 Asian financial crisis, Ssangyong E&C fell into dire straits under mounting debts, after which KAMCO and other creditors injected bailout funds to rescue the company.

By Chung Joo-won (joowonc@heraldcorp.com)