[Asia Economy Reporter Jo Gang-wook] The announcement of Doosan Heavy Industries & Construction's final business normalization plan (self-rescue plan), which received 2.4 trillion won in support from the Korea Development Bank and the Export-Import Bank of Korea, is expected to be postponed until next month. The market views the unresolved differences between the creditors and Doosan regarding the sale of key affiliates such as Doosan Infracore and Doosan Bobcat as the reason.
According to financial sources on the 27th, the creditors are currently in the final stages of due diligence covering Doosan Heavy Industries & Construction and the entire Doosan Group.
Initially, Doosan Group and the creditors, including KDB Industrial Bank and the Export-Import Bank of Korea, planned to finalize and announce the business normalization plan based on the due diligence results from Samil Accounting Corporation within this month. However, negotiations have not been concluded as the creditors and Doosan continue a "tug-of-war" over the sale targets and timing for business normalization.
A creditor official said, "The analysis is taking time, so it is unlikely that the Doosan Heavy Industries normalization plan will be released within this week."
Previously, Doosan Group submitted a self-rescue plan to the creditors aiming to secure more than 3 trillion won through capital increase, asset sales, and cost reductions. Since then, Doosan has been focusing all efforts on securing liquidity through the sale of affiliates and assets.
Doosan Solus, Doosan Tower, Club Mow CC, Doosan Construction, and Doosan Infracore have been mentioned or identified as potential sale targets. Asset sales of subsidiaries, capital increase of Doosan Heavy Industries & Construction, and major shareholder contributions are key details of the self-rescue plan. Additionally, Doosan's core business units such as Industrial Vehicle BG, Electronics BG, Motrol BG, as well as Doosan Fuel Cell and Doosan Mecatec, are also being discussed for sale.
In particular, Doosan Group is pushing for the sale of its entire 61% stake in Doosan Solus. Doosan Solus is owned 61% by ㈜Doosan (17%) and special related parties including Doosan Group Chairman Park Jeong-won (44%). Doosan previously negotiated the sale of Doosan Solus with the private equity fund SkyLake Investment but failed to reach an agreement on the sale price, leading to a final breakdown. Consequently, Doosan is switching to a public sale to find new buyers. Interested parties in acquiring Doosan Solus include LG Chem, SKC, and Samsung SDI. Additionally, Doosan is reportedly negotiating the sale of Doosan Tower with Maston Investment Management.
Recently, rumors about the sale of the Doosan Bears baseball team have surfaced. Doosan denied these rumors, stating, "There are no plans to sell the Doosan Bears." Some analysts suggest that the sale rumors of the Doosan Bears, another symbol of Doosan, are a result of the tension between the creditors and Doosan Group. It is pointed out that the creditors are using the potential sale of the Doosan Bears as leverage to pressure Doosan Group into preparing a stronger self-rescue plan. In reality, even if these sales are completed, it is uncertain whether they will secure the 3 trillion won liquidity target. Doosan hopes to sell Doosan Solus for 800 billion to 1 trillion won, but this is reportedly far from the valuation perceptions of potential buyers.
Ultimately, the tug-of-war is expected to continue over the proposal to put Doosan Bobcat and Doosan Infracore, Doosan's "cash cows" and core affiliates, up for sale. However, considering their business importance within the group, the likelihood of actual sales of Doosan Infracore and Bobcat seems low.
Attention is also focused on whether additional funding from the creditors will be provided after the announcement of the business normalization plan. Doosan Heavy Industries & Construction must repay a total of 4.2 trillion won in borrowings this year. The creditors have so far injected a total of 2.4 trillion won into Doosan Heavy Industries & Construction to put out the immediate fire. However, if sales such as Doosan Solus are not completed within the year, additional funding is expected to be necessary. The creditors have previously stated that they will decide on additional support after reviewing the business normalization plan submitted by Doosan.
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