Seoul: The protracted takeover of one of the world's best shipyards is under duress thanks to the global credit crunch. Korea Development Bank has rejected a financing plan submitted by Hanhwa for a majority stake in Daewoo Shipbuilding & Marine Engineering Co. and told it to come up with a new proposal by the end of this week, the state-run bank said yesterday.
"Hanhwa recently submitted a financing plan regarding Daewoo Shipbuilding shares, but it was insufficient and not in accordance with previously agreed terms," KDB said in an e-mailed statement.
Industry sources said that Hanhwa may have proposed to pay half of the acquisition price by the March 30 deadline by selling assets, while insisting on flexibility on the payment of the remaining half.
Hanwha offered the latest proposal in response to the KDB's ultimatum last week. It told Hanwha to abide by the original payment agreement or give up buying the world's third-largest shipbuilder.
Hanwha had sought to ease payment terms, as funding became difficult amid financial market turmoil. It signed on Nov. 13 a preliminary contract with the KDB to purchase a 50.4 percent stake in Daewoo. The state-run KDB is the largest shareholder of the shipbuilder. Upon sending the ultimatum, the KDB proposed to Hanwha that the lender would set up a private equity fund, along with institutional investors, to buy assets from Hanwha.
The acquisition price was not disclosed, but is widely speculated to be about 6.3 trillion won. Hanwha has already paid 5 percent of the bidding price, about 300 billion won ($230 million). "Once Hanwha submits a new plan, we will thoroughly review its feasibility and decide on whether or not to proceed with the sale," the KDB statement said. [14/01/09]
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