Jungheung Construction Nears Completion of Daewoo Construction Acquisition... Stock Purchase Agreement to Be Signed on the 9th

Jungheung Construction Group Headquarters

Jungheung Construction, the preferred bidder for the acquisition of Daewoo Engineering & Construction, announced on the 8th that it has completed the due diligence process and will sign a Stock Purchase Agreement (SPA) with KDB Investment (KDBI) at the Four Seasons Hotel in Gwanghwamun, Seoul, on the 9th.

Earlier, KDBI, the largest shareholder of Daewoo Engineering & Construction, selected Jungheung Group as the preferred bidder for acquiring 50.75% of Daewoo Engineering & Construction's shares (201,931,209 shares) in July, and signed a memorandum of understanding regarding the share sale with Jungheung Group in August. Following the detailed due diligence on Daewoo Engineering & Construction, the final main contract is now being signed.

Jungheung Construction explained, "Considering the COVID-19 situation, only Jung Chang-sun, Chairman of Jungheung Group, and Lee Dae-hyun, CEO of KDB Investment, will attend the contract signing ceremony."

Jungheung stated that after signing the main contract on the 9th, once the corporate merger review by the Fair Trade Commission and other authorities is completed, the payment will be finalized, and Jungheung will become the largest shareholder of Daewoo Engineering & Construction. The corporate merger review is expected to take about one to two months.

Daewoo Engineering & Construction ranks 5th in this year's construction capability evaluation, while Jungheung Group's affiliated construction companies, Jungheung Togeon and Jungheung Construction, rank 17th and 40th, respectively. Combining the construction capabilities of the three companies would immediately elevate them to 3rd place in the rankings, but Jungheung has drawn a clear line, stating, "There are no plans for a merger."

In October, Jungheung Group emphasized in an official press release, "After completing the acquisition of Daewoo Engineering & Construction, we will continue to invest steadily and guarantee employment stability and independent management." They also highlighted, "Daewoo Engineering & Construction's debt ratio, which was about 248% at the end of last year, will be lowered to a level similar to Jungheung Group's (105.1%) to secure asset soundness."

They intend to maintain an independent management system even after the acquisition and continue existing independent brands such as Prugio. At a press conference in July, Jung Chang-sun, Chairman of Jungheung Group, stated, "Daewoo Engineering & Construction will continue to operate separately, and not a single penny of the money coming into the company will flow out externally."

A Jungheung Group official said, "Based on abundant financial resources, we are proceeding with the acquisition without financial investors (FI), so Daewoo Engineering & Construction will have sufficient capacity for self-generated profits and reinvestment." He added, "We will actively support Daewoo Engineering & Construction to make further leaps forward."