이 기사는 2019년 11월 15일 08시00분 thebell에 표출된 기사입니다

The tender for South Korea's mid-sized shipbuilder Sungdong Shipbuilding & Marine Engineering is expected to affect the country's shipbuilding industry. Market expects more mid-sized shipbuilders to be put up for sale starting with Daesun Shipbuilding & Engineering early next year.

According to mergers and acquisitions (M&A) industry sources on November 11, seven potential buyers submitted their Letter of Intent (LOI) to acquire Sungdong. Among the seven, some wanted to acquire shipyard one and two separately while others wanted to purchase as a whole. There also are more potential buyers who expressed their intention to join the final bidding round, which takes place on November 13.

During the previous three sell-off attempts, there were no more than five potential buyers who showed their interests, including some mid-sized marine equipment companies and financial investors. At that time, the court rejected their bids as they failed to meet requirements of funding plan. This time, it is said that at least two potential buyers kicked off their acquisition process by forming advisors.

Industry watchers take it as a positive sign that the potential buyer pool has expanded after three failures. Market expectation for the acquisition has heightened with new investors showing their interests.

"There are many concerns on the deal itself, but for now, it is encouraging that seven potential buyers submitted the LOI. It is more than enough to heighten the expectation that new potential buyers have appeared," said an M&A industry source.

Some expect, depending on the result of Sungdong deal the sales of other mid-sized shipbuilders may pick up the pace. As the market interest in mid-sized shipyards like Sungdong has been proved, companies are likely to collect debts through the sale in early next year after securing potential buyer pool.

Daesun is likely to accelerate its sale process early next year. Daesun is dependent on support from the Export-Import Bank of Korea, South Korea's state-run policy lender. STX Offshore & Shipbuilding also is expected to be up for sale. State-run Korea Development Bank (KDB) is the main creditor of STX Offshore. Market expects Hanjin Heavy Industries & Construction to be KDB Investment's second asset. KDB Investment is the independent private equity arm of the KDB.

The result of Sungdong sale is going to affect the restructuring process of South Korea's mid-sized shipyards. If the company succeeds in making a contract, state-run banks will also be able to pick up the pace on finding new owners of shipyards, but if the Sungdong fails its last attempt and go bankrupt, such deal activities will likely shrink for some time.

"The key is how potential buyers take the shipbuilding business seriously and the funding capacity that they have. The future of Sungdong, the most nettlesome company in the market, will have some influence on other mid-sized shipyards," said a second M&A industry source.

(By reporter Choi Ik-hwan)