Advisory firms have eyes on Doosan’s restructuring The Korea conglomerate will submit self-rescue plans to state-run banks soon

Translated by Ryu Ho-joung 공개 2020-04-14 08:00:10

이 기사는 2020년 04월 14일 08:00 더벨 유료페이지에 표출된 기사입니다.

Investment bankers in South Korea are keeping an eye on Doosan Group as a major restructuring of the country’s conglomerate is expected to start soon.

Doosan Group is expected to submit self-rescue plans to two state-run banks – Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank) – within a few days after the banks decided to pump in one trillion won to save the conglomerate suffering from liquidity shortages, people familiar with the matter said on April 8. The plans will likely include details on how to repay the financing.

Doosan Group reportedly started tapping potential buyers last year for some of its businesses and assets.

“Doosan Group tapped possible buyers for some of its businesses last year,” an investment banking industry source said. “No deals were struck yet. But Doosan Group has since accelerated its restructuring efforts, so in the meantime we plan to focus on narrowing down potential buyers while keeping a close eye on the situation.”

Especially, potential buyers’ interest in Doosan Engineering & Construction – the conglomerate’s construction arm known for its apartment brand We’ve – still remains high after a planned deal fell through last year due to the builder’s debt issues. But many expect talks to sell the business to restart between Doosan Group and some of potential buyers.

To prepare for this possibility, some of the country’s M&A advisory firms are moving fast to tap several local builders to sound out their interest. Firms that worked with potential buyers for Doosan E&C last year also appear to try to make sure to get themselves prepared.

In addition, advisory firms’ interest in the group’s other subsidiaries that could be candidates for sale – including battery copper foil maker Doosan Solus, subway operator Neo Trans and the retail arm Doota Mall – is expected to increase going forward.

The restructuring efforts are now ostensibly led by Doosan Group. This could have an impact on the process of selecting advisory firms, as the conglomerate partnered with Samil PricewaterhouseCoopers on many deals in the past. The accounting firm is also likely to advise Doosan Heavy Industries & Construction, which is expected to go through the workout process.

But, if the two state-run banks take a front seat in restructuring the conglomerate, Credit Suisse, which is advising KDB on the sales of Asiana Airlines and KDB Life Insurance, would have a greater chance to be mandated as lead manager.

The majority’s view is that Doosan Group’s restructuring would usher in more restructuring activities initiated by domestic conglomerates in the future. Some advisory firms seeking to grab this opportunity are already working on hiring additional staff in anticipation of an increasing workload.

“On the part of advisory firms, we just can’t sit on our hands,” an investment banking source said. “Once Doosan Group’s self-rescue plans are revealed, we will speed up efforts to tap potential buyers for the group’s businesses that could be possibly put up for sale.”

(By reporter Choi Ik-hwan)
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