Samsung Engineering drops 19%

Samsung Engineering during the day plunged the most on record in Seoul trading after Korea’s largest builder of engineering projects reported a loss and announced plans to sell new shares to shore up its finances.

The shares slumped as much as 24 percent, the most since Jan. 3, 1997. The closed at 18.81 percent lower at 25,900 won.

The Seoul-based engineering company reported its biggest quarterly loss Thursday in at least six years, citing delays on work in Saudi Arabia, the United Arab Emirates and other projects. Engineering, construction and shipbuilding companies in Korea like Daewoo Shipbuilding & Marine Engineering are struggling with debt and mounting losses after a failed foray into international markets.

Samsung Engineering intends to sell shares for 1.2 trillion won ($1.05 billion) to existing shareholders, according to a stock exchange filing Thursday. That would be more than its current market capitalization of 1.08 trillion won. The company also plans to sell its headquarters building, which has a value of 350 billion won.

The engineering company posted an unexpected third-quarter operating loss of 1.51 trillion won and a net loss of 1.33 trillion won, the biggest since at least 2009, according to data compiled by Bloomberg. The forecast was for net income of 15.9 billion won.

Samsung aims to receive orders for 6 trillion won this year and forecast sales of 6.3 trillion won this year. The sales forecast lagged behind the 7.33 trillion won mean estimate in a Bloomberg survey of 22 analysts.

The losses come amid renewed speculation of a merger with Samsung Heavy Industries. Last month, Samsung Heavy Chief Executive Officer Park Dae-young said a merger with Samsung Engineering could create synergy, although it will be difficult to pursue a combination soon. The two units of Samsung Group, Korea’s biggest conglomerate, called off a merger attempt in November 2014 after failing to win shareholder support.

Samsung Group planned the merger last year to help the companies compete with Technip SA and Saipem SpA in the offshore oil and gas market. A combination of the two Seoul-based manufacturers would have the scale to bid for bigger orders, such as large LNG ships and energy projects.

In November, Samsung Group scrapped the 2.5 trillion won merger after some investors asked the companies to buy back the shares they held. According to regulations in Korea, a company can call off a merger if buyback requests reach a level that could increase its financial burden. Bloomberg