Heart Burnt by Lanxing

Daewoo allied enterprises, including Daewoo Construction, Daewoo Heavy Industries and Machinery, Daewoo Shipbuilding & Marine Engineering, are undergoing changes in sales method such as multiple designations for the preferred bidder status which are drastically different from the past.

An official of KAMCO (Korea Asset Management Corporation), which is leading the sale process of Daewoo affiliated companies, stated on March 30, “We will not sell Daewoo allied enterprises to those who only offer a high takeover value,” and added, “We are planning to evaluate primarily on suggested business plans for these companies presented by the takeover applicants and their price proposal of the takeover funds.”

The reason behind KAMCO’s radical change in the sales method is to prevent a recurring error which was demonstrated during the recent sale of Ssangyong Motor Company. Ssangyong creditors designated China’s Lanxing group, also known as China National Bluestar Group Corp., as their preferred bidder but were faced with confusion as the sale process returned to the starting point on March 29.

KAMCO is planning to apply its altered method of sales on Daewoo Heavy Industries and Machinery, which will designate their preferred bidders during April.

Accordingly, takeover applicants should submit a detailed report of Daewoo Heavy Industries and Machinery’s 3-5 year development plan and price proposal for takeover funds. KAMCO will designate about three qualifiers who will meet the qualifications, let them compete again on the bidding price, and the final applicant will get to sign a contract.

On the other hand, the sale process of Daewoo affiliated enterprises which plans to finish within the year is also shooting the rapids. With 40 plus companies, both domestic and international that are competing to takeover Daewoo Heavy Industries and Machinery, the sale will probably end during the first half of this year.

International investment companies including Goldman Sachs, Morgan Stanley, Citibank, JP Morgan, Deutsche Bank, ING are vying with each other by organizing a consortium with domestic brokerage firms for the bid on the position of Leading Management for the Underwriting Company for Daewoo Heavy Industries and Machinery, which will be determined on March 31.

Plans to finalize sales within the year seems to be smooth sailing as Bechtel, currently the number one construction company in the U.S., as well as HRH, famous for its New York Madison Square Garden renovation, and Parsons, an internationally recognized construction management company, are all actively pursuing the takeover of Daewoo Construction.

Bechtel and Parsons have already obtained contracts for reconstruction in Iraq including airport, road, harbor, and if they takeover Daewoo Construction they will get to manage the actual construction.

KAMCO is also planning to take full-scale charge during the sale process of Daewoo International in April. Daewoo Shipbuilding and Marine Engineering, with the Korean Development Bank as its number one shareholder, will commence the sale process by the end of this year.

Keuk-In Bae bae2150@donga.com