Daewoo Shipbuilding Rethinking Sale Plans

Compared with the struggles of other former Daewoo Group affiliates to attract investments, Daewoo Shipbuilding and Marine Engineering Company looks like it has found easy street.

Until early this year, the shipbuilder was desperately searching for foreign investors, but its business improved significantly in the first quarter and the industry predicted that the company would soon graduate from its forced restructuring program, the company finds itself in a much cozier position.

Daewoo Shipbuilding, spun off from Daewoo Heavy Industry last October, had been counting on the aboriginal Maori people of New Zealand until early this year to buy the company. In March, the firm's president, Shin Yong-kyun, announced that Daewoo was negotiating with the Maori for the sale of a controlling stake.

But the negotiations slowed after the shipbuilder reported strong first-half performance numbers. Reflecting a change in who was courting whom, Prime Minister Helen Clark of New Zealand urged Seoul to push the sale during a visit to Korea in May.

The Maori, which received a large cash settlement related to fishery rights from the Australian government last year, has made extensive preparations to invest in the shipbuilder. The group established a paper company in Australia to buy the Korean firm late last year and said they would build a shipyard in Australia with Daewoo's technology. Daewoo sent 12 managers to Australia to conduct a feasibility study of such a shipyard.

But the weakening of the won in March and April lifted Daewoo's business conditions. The shipbuilder changed course, deciding to postpone a sale in favor of pumping up its corporate value. The won's slide from 1,200 won to the dollar to 1,300 won raised Daewoo's projected sales for this year by 105 billion won and its profit by 76 billion won. This year, its stock price has shot up from 3,000 won to 10,000 won.

A Daewoo spokesman, An Wook-hyeon, said the firm is examining its options.

by Cheong Chul-gun