Korea Development Bank mulls backup plan for Daewoo engineering: Chief

Korea Development Bank (KDB) is considering drawing up contingency plans in case the sale of Daewoo Engineering & Construction Co. hits a snag, its chief said. In late November, liquidity-squeezed Kumho Asiana Group picked two foreign funds -- Jabez Partners and TR America Consortium -- as preferred bidders for a controlling stake in its construction unit, with the aim of selling it within this year.
To help it sell Daewoo Engineering, the group requested 18 financial investors to hold off on exercising their rights to sell back the stakes until January 15. One investor has exercised a put-back option for the builder.
"Although we expect the sale of Daewoo Engineering to go smoothly, KDB, as a main creditor bank, is mulling 'Plan B' to prepare for a possible failure of the sale," Min Euoo-sung, chairman of KDB Financial Group Inc., told reporters.
Min noted that Kumho Group is known to be doing fine-tuning to select the final bidder and KDB is willing to provide financial support to an investor if it has genuine commitment to buying the builder.
Meanwhile, Min reiterated that KDB is not considering providing additional financial support to ailing carmaker Ssangyong Motor Co. if a definite buyer emerges.
A South Korean bankruptcy court approved Thursday a turnaround plan by troubled Ssangyong Motor, giving the debt-ridden carmaker a chance to revive its struggling business.
In August, the policy lender decided to provide financial aid worth 130 billion won (US$110.6 million) to help the carmaker normalize its operations. South Korea's smallest automaker, which has been under bankruptcy protection since February, has asked for emergency funding of up to 150 billion won from KDB to cover its restructuring expenditures and develop a new compact sport utility vehicle. But KDB rejected its fund request for vehicle development.
He said that KDB will seek to sell Daewoo Shipbuilding & Marine Engineering Co., but it will not be in a hurry to sell the shipbuilder.
"We will look for a buyer which could help beef up global competitiveness in the Korean shipbuilding industry and promote Daewoo Shipbuilding's long-term growth," Min said.
The sale of the world's third-largest shipyards is being re-pushed after the bank scrapped a deal to sell a combined 50.4 per cent stake in the company to Hanwha Group in January this year.