Korea Asset Management Corp. may give Daewoo Shipbuilding & Marine Engineering Co. shares worth about 990 billion won ($870 million) to investors in a state-led bailout fund if it fails to sell the stock this year.
The government agency is drawing up plans to auction off the 19 percent stake as it works on closing the turnaround fund by November, Chief Executive Officer Chang Young Chul said in an interview yesterday. Kamco and Korea Development Bank, the two biggest shareholders in Daewoo Shipbuilding, have previously failed in two attempts to sell their holdings in the shipyard.
“We have to sell the stake by November before the bad-debt restructuring fund is wound up,” Chang said. “If we can’t sell it by then, we plan to return it to the fund’s shareholders.”
Kamco expects arrangers Morgan Stanley (MS) and Shinhan Investment Corp. to come up with a sale plan for the Daewoo Shipbuilding stake by June, Chang said. The Seoul-based agency, created in 1962 to absorb distressed assets, took on 111.5 trillion won in bad debt after the 1997-1998 Asian financial crisis as it bailed out financially-troubled companies.
Kamco may also give investors stakes in companies including Ssangyong Engineering & Construction Co., Ssangyong Cement Industrial Co. and Kyobo Life Insurance Co. as the 15-year bailout fund closes, Chang said. The Kamco-run Non-Performing Assets Management Fund, which was set up in November 1997, got equity in companies in return for buying bad debt.
The fund has previously sold shares in trading company Daewoo International Corp. and construction-equipment maker Daewoo Heavy Industries & Machineries Ltd., which was later renamed Doosan Infracore Co.
The sales have helped the fund recover 45.7 trillion won as of November, 6.5 trillion won more than it spent, according to Kamco. Investors include Korea Deposit Insurance Corp., Korea Development Bank, Shinhan Bank, Woori Bank, Hana Bank and Korea Exchange Bank, according to the state agency.
Daweoo Shipbuilding (042660) has tumbled 34 percent in Seoul trading in the past year, paring its market value to $4.6 billion, according to data compiled by Bloomberg.
Kamco is also considering buying non-performing assets in the U.S. as part of a long-term plan to expand overseas, Chang said. The company may partner with U.S. financial institutions on bad-debt deals, he said.
“There could be opportunities where we can utilize our experience from successfully recovering from the financial crisis,” he said.
Kamco will focus on bad debts from companies operating in industries such as natural resources, he said. Tapping overseas bad debt market will be a very long-term task, the CEO said without elaboration.
Kamco and Korea Development Bank became shareholders of Daewoo Shipbuilding after swapping debt for equity in December 2000. Korea Development has also said it plans to make another attempt at selling its 31 percent stake. Kamco hasn’t held talks with Korea Development on a joint sale, Chang said.
“It would be ideal to sell Daewoo Shipbuilding shares together with Korea Development,” Chang said. “But we’re under a deadline and we haven’t discussed the issue.”
Kamco and Korea Development Bank last tried to sell their stakes in 2009. That failed because of concerns Hanwha Group may not be able to raise the 6.3 trillion won it offered.
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