December 28, 2008
KDB gives Hanwha more time on DSME deal
South Korea's state-run Korea Development Bank (KDB) said Sunday it is willing to give Hanwha Group one more month to raise an estimated 6 trillion won (US$4.6 billion) required to buy Daewoo Shipbuilding & Marine Engineering Co., the world's third-largest shipbuilder.
Under a preliminary deal signed in November, says a report by Yonhap News Agency posted on the KDB web site, Hanwha had until Monday to ink the final deal for a 50.37 percent stake in DSME, with the full payment due by the end of March.
Hanwha, citing financing constraints amid the spreading global financial turmoil, requested KDB to delay the deal or accept payment in installments.
On Sunday, KDB said that, "given the impact of the successful completion of the deal on the local economy," it can "delay exercising its rights until January 30, 2009." The rights referred to include penalizing Hanwha for failing to implement its part of the deal on pre-set dates.
KDB requested that Hanwha do its best to raise money by selling assets. It said that if asked to buy part of the conglomerate's assets at reasonable prices and conditions, KDB "could consider cooperating in Hanwha's efforts to raise funds."
KDB said that while it is willing to give Hanwha more time, it could not accept payment in installments nor adjust the takeover price.
"Although KDB could buy part of Hanwha Group's assets, the takeover price will remain intact," Chung In-sung, a senior executive director at KDB, told reporters. "Hanwha also should make full payment by the end of March as planned."