Korean Economy News
KDB to renew attempt to sell Daewoo EnC this year on improving performance

By Hong Jang-won and Yong Hwan-jin

State lender Korea Development Bank (KDB) will renew procedures to sell Daewoo Engineering & Construction Co. (Daewoo E&C) as the construction company has regained market confidence over its financial statement after it earned a clean opinion from an outside auditor.

The KDB is set to order a due diligence and tap the market in search of buyers in hopes to finalize the sales this year. The auction schedule may come out as early as next month, bank sources said.

The KDB created a private equity fund to buy out a 50.75 percent stake in the construction company from Kumho Asiana Group faced with liquidity crisis in 2010 at 3.2 trillion won ($2.8 billion).

The shares would fetch 1.39 trillion won at current market value and 2 trillion won at best when attached with management right premium.

As of 2:05 p.m. on Monday, shares of Daewoo E&C rose 0.3 percent to 6,710 won in Seoul trading.

The conditions to sell the company have improved due to recovery in corporate performance. Daewoo E&C carried out big bath by booking $700 million forward-looking losses ahead in the fourth quarter ended in December. For this year, it eyes 700 billion won in operating profit and 11.4 trillion won in sales. For the first-quarter profit, market consensus is at 115 billion won.

The state creditor is likely to look overseas for buyers as no local company can afford it.

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