Hoban named as likely bidder for Daewoo E&C

Jun Young-sam, vice chairman of Korea Development Bank, discusses the sale of Daewoo Engineering & Construction at the bank’s headquarters in Yeouido, western Seoul, on Wednesday. [YONHAP]

The state-run Korea Development Bank said Wednesday that it has chosen Hoban Construction as the preferred bidder to buy the controlling stake in Daewoo Engineering & Construction.

The decision comes after Hoban, a midsize builder, made a solo bid for the stake earlier this month.

Korea Development Bank plans to sell a 50.75 percent stake in Daewoo Engineering.

Under a deal, Hoban will buy a 40 percent stake in Daewoo Engineering and acquire the remaining 10.75 percent stake two years later.

Although Korea Development Bank did not reveal the value of stake sale, Hoban is reportedly moving to buy a 40 percent stake for 1.2 trillion won ($1.12 billion), or 7,700 won per share.

Korea Development Bank has poured a total of 3.2 trillion won into keeping Daewoo Engineering afloat.

As of 2016, Hoban reported sales of 1.2 trillion won, compared with Daewoo Engineering’s 10.9 trillion won.

Korea Development Bank purchased the stake in Daewoo Engineering in 2010 to help the debt-ridden conglomerate restructure its finances.

Kumho Asiana’s two subsidiaries - Kumho Tire and Kumho Industrial - have been under a debt restructuring program since early 2010 due to a severe cash crunch sparked by the group’s purchase of Daewoo Engineering in 2006.

Yonhap