SKorea's bank delays deal to sell Daewoo shipyard
South Korea's state-run Korea Development Bank said Sunday it will delay finalising a deal to sell the world's third largest shipyard, Daewoo Shipbuilding and Marine Engineering.
The signing of the final contact to sell the shipyard to preferred bidder Hanwha Group, originally due on Monday, has been pushed back by one month until January 30, 2009, the bank said.
The delay came after Hanwha demanded that payment for the deal be delayed or made in instalments citing worsening financing conditions. Hanwha also requested more time to conduct due diligence.
The bid price remains undisclosed. But industry sources estimate it at around six trillion won (4.6 billion dollars) for a controlling 50.37 percent stake in the local shipyard.
Hanwha, picked as successful bidder for the shipyard in October, already made down payment. Under a preliminary agreement thrashed out last month, Hanwha should close the deal on Monday and make full payment by late March.
"The Korea Development Bank can delay exercising its rights as a seller until January 30, 2009," the bank said in a statement, referring to contract terms on penalising Hanwha for failing to meet deadlines.
The bank, however, demanded that Hanwha present a concrete payment plan and strictly meet the late-March deadline for the full payment.
The bank also suggested that it could acquire some of Hanwha's assets to help the group raise funds.
Hanwha, a business conglomerate focused on chemical and energy firms, has been facing difficulty raising funds through the sale of its holdings in real estate and the country's number two life insurer, Korea Life Insurance, amid a global financial crisis, market watchers say.
Creditor banks took over the Daewoo shipyard in 2000 after its parent, Daewoo Group, collapsed under a debt mountain totalling 82 billion dollars -- one of the world's largest corporate failures.
But the shipyard has a lucrative energy-related business and strong cash flows. Last year its sales climbed 32 percent year-on-year to 7.1 trillion won.
Hanwha hailed the bank's decision as "a step forward" to understanding the tough financial markets the conglomerate faces.
"Additional negotiations are necessary... to address current obstacles surrounding the sale of Daewoo Shipbuilding," Hanwha said in a statement.
But Chung In-Sung, a senior executive director of the Korean Development Bank, forestalled further attempts by Hanwha to make payment in instalments or adjust the takeover price.
"Although KDB could buy part of Hanwha Group's assets, the takeover price will remain intact," Chung told reporters, according to Yonhap news agency.
"Hanwha also should make full payment by the end of March as planned."
The signing of the final contact to sell the shipyard to preferred bidder Hanwha Group, originally due on Monday, has been pushed back by one month until January 30, 2009, the bank said.
The delay came after Hanwha demanded that payment for the deal be delayed or made in instalments citing worsening financing conditions. Hanwha also requested more time to conduct due diligence.
The bid price remains undisclosed. But industry sources estimate it at around six trillion won (4.6 billion dollars) for a controlling 50.37 percent stake in the local shipyard.
Hanwha, picked as successful bidder for the shipyard in October, already made down payment. Under a preliminary agreement thrashed out last month, Hanwha should close the deal on Monday and make full payment by late March.
"The Korea Development Bank can delay exercising its rights as a seller until January 30, 2009," the bank said in a statement, referring to contract terms on penalising Hanwha for failing to meet deadlines.
The bank, however, demanded that Hanwha present a concrete payment plan and strictly meet the late-March deadline for the full payment.
The bank also suggested that it could acquire some of Hanwha's assets to help the group raise funds.
Hanwha, a business conglomerate focused on chemical and energy firms, has been facing difficulty raising funds through the sale of its holdings in real estate and the country's number two life insurer, Korea Life Insurance, amid a global financial crisis, market watchers say.
Creditor banks took over the Daewoo shipyard in 2000 after its parent, Daewoo Group, collapsed under a debt mountain totalling 82 billion dollars -- one of the world's largest corporate failures.
But the shipyard has a lucrative energy-related business and strong cash flows. Last year its sales climbed 32 percent year-on-year to 7.1 trillion won.
Hanwha hailed the bank's decision as "a step forward" to understanding the tough financial markets the conglomerate faces.
"Additional negotiations are necessary... to address current obstacles surrounding the sale of Daewoo Shipbuilding," Hanwha said in a statement.
But Chung In-Sung, a senior executive director of the Korean Development Bank, forestalled further attempts by Hanwha to make payment in instalments or adjust the takeover price.
"Although KDB could buy part of Hanwha Group's assets, the takeover price will remain intact," Chung told reporters, according to Yonhap news agency.
"Hanwha also should make full payment by the end of March as planned."