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Cash-strapped Doosan to sell core construction equipment maker unit


Cash-strapped Doosan Group plans to sell its key construction equipment maker unit Doosan Infracore Co. as part of its self-rescue measures to receive financial support from creditor banks, industry sources said Tuesday.

South Korea's 15th-largest conglomerate is seeking to sell its shares and assets to improve its financial structure and repay debts held by the flagship unit Doosan Heavy Industries & Construction Co. in return for a 3.6 trillion-won ($2.98 billion) lifeline from state-run banks.

The group plans to sell a 36.27 percent stake held by Doosan Heavy in Doosan Infracore as part of its self rescue measures worth some 3 trillion won, according to financial industry sources.

Market watchers said the deal could fetch between 600 to 800 billion won. Credit Suisse will reportedly arrange the deal as a sales manager.

South Korea's leading power plant builder Doosan Heavy has faced a liquidity crisis due to years of declining orders amid an economic slowdown.

The company's business setbacks have deepened in recent years as the Moon Jae-in administration is pushing for a nuclear phase-out policy.

The country seeks to shift its energy policy from nuclear and fossil fuel-based power generation to renewable energy sources, such as solar power. The group is a key player in the commercial nuclear field.

Doosan Heavy swung to a net loss of 371.4 billion won in the first quarter from a year earlier due to increased one-off costs and losses from equity ties with Doosan Bobcat Co.

In an effort to secure liquidity, Doosan Group has put its affiliates and assets, such as Doosan Solus Co., a copper foil maker for electric vehicles, and Doosan Tower, the group's headquarters building in Seoul, up for sale.

Last week, group chairman Park Jeong-won said the group has a target of raising 1 trillion won this year by selling new shares and assets.

"As the process to sell units including Doosan Solus is being protracted, the group appears to have shifted its focus to Doosan Infracore," Lee Dong-hun, an analyst at Daishin Securities, said.

Doosan Group also plans to split its troubled construction unit Doosan Engineering & Construction Co. into two and to put the split-up entity with relatively highly valued assets up for sale.

The sale of Doosan Engineering is part of the group's move to normalize its business. In March, Doosan Heavy acquired the construction firm.

Shares of Doosan Infracore jumped by the daily limit of 30 percent to close at 7,480 won on the main bourse. Stocks of Doosan Heavy jumped 10.4 percent to 5,150 won. (Yonhap)