'We'll start all over to unload DSME,' says KDB chief

Lee Dong-gull, chairman of the Korea Development Bank, speaks during a press conference on Thursday. [KOREA DEVELOPMENT BANK]

Korea Development Bank, the main creditor of troubled Daewoo Shipbuilding and Marine Engineering (DSME), will review a sale of the shipbuilder from scratch following the European Commission’s veto of a merger with Hyundai Heavy Industries (HHI).

Lee Dong-gull, chairman of the state-run bank, said Thursday that all possibilities are open, although he didn't offer any detail.
“We will set out to find a new buyer willing to inject fresh finances and manage [DSME] in a responsible manner,” Lee said during an online press briefing.

Lee ruled out foreign shipbuilders as potential suitors due to the risk of critical technologies being lost.
“We will share more detailed plans once we finish management consulting on DSME in March,” he said.

Earlier this month, European authorities blocked the proposed 2-trillion-won merger, citing concerns about competition being reduced, leading to higher prices for LNG carriers.

The European Commission projected that the merged companies would have at least 60 percent market share, which would not be good for European buyers of LNG carriers, who account for 50 percent of all such sales.

Lee voiced disappointment with the decision, describing it as “regrettable” and resulting from “national egoism.”
“The EU commission mentioned the dominant market share, but a review of the merger should also take into account market conditions and the degree of insolvency of the merged unit. The regulators in China and Singapore approved the deal in that respect,” Lee said.

In 2019, the state-run bank agreed to transfer its 55.7 percent stake in DSME -- worth 2.2 trillion won -- to the holdings unit of HHI. In exchange, the holding company issued shares to KDB, making the bank the second-largest shareholder in the holding company after Hyundai.

Restructuring started under the former Park Geun-hye administration when DSME reported operating losses following an accounting fraud scandal.

KDB Chairman Lee also touched upon the sale of SsangYong Motor to Edison Motors, an electric car maker based in Hamyang, South Gyeongsang.

Lee demanded that Edison inject funding in a straightforward manner instead of devising a leveraged buyout, in which loans are used and the company being bought is collateral.

Under the final agreement, Edison agreed to acquire SsangYong for 304.8 billion won, with some of the proceeds being used to repay a part of SsangYong’s debt to financial institutions.

A Seoul court approved the agreement on Jan. 10.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]