Chairman Lee Dong-geol: "Daewoo Shipbuilding will not provide additional funding without the possibility of management normalization"

Lee Dong-geol, Chairman of the Korea Development Bank, is answering questions at an online press conference held on the 27th.

[Asia Economy Reporter Song Hwajeong] Lee Dong-geol, Chairman of the Korea Development Bank (KDB), stated that no additional funds will be provided to Daewoo Shipbuilding & Marine Engineering (DSME) unless there is a possibility of management normalization. He emphasized that priority will be given to devising ways to strengthen DSME's viability without additional support from creditors.

On the 27th, Chairman Lee held an online press conference and made these remarks. He said, "The European Union's (EU) disapproval of the merger between Hyundai Heavy Industries and DSME is a judgment based on thorough national self-interest and does not seem fair, which is regrettable," adding, "If there is no confidence in DSME's potential for normalization and the necessity for the development of the shipbuilding industry, additional financial support is impossible."

Chairman Lee added, "Even if the merger is canceled, the prolonged management under the state-run bank system leads to increasing dependency due to quasi-nationalization and causes an expansion of insolvency, which is ultimately undesirable for the development of South Korea's shipbuilding industry," and said, "We will prepare mid- to long-term management plans based on the ongoing management consulting results."

Regarding this, he also stressed the necessity of litigation by Hyundai Heavy Industries. Chairman Lee said, "Hyundai Heavy Industries has expressed its intention to explore all possible legal measures. Whether to proceed with litigation is up to Hyundai Heavy Industries, but regardless of the outcome, I personally think litigation is necessary to show that South Korea's industry will not be unilaterally swayed by the EU's decision."

Previously, at a press conference in November last year, he mentioned considering plans up to Plan D, including a 'Plan B' related to DSME, but did not disclose specific details of Plan B at this conference. He explained, "Since a comprehensive review is necessary, it is difficult to disclose specifics. We need to check many changes such as the sharp rise in raw material prices, large-scale operating losses, and domestic conditions, and after reviewing the detailed consulting results, we will proceed by confirming DSME's strengths and weaknesses." He added, "In any case, Plans B through D are open."

Regarding the sale of Ssangyong Motor, Chairman Lee stated that the decision on whether to agree to the rehabilitation plan submitted by Ssangyong Motor will focus on how the existing payments will be repaid with the acquisition price. He said, "The decision to agree to the rehabilitation plan will be based solely on the debt repayment plan," adding, "If collateral is secured, there is no incentive not to agree."

However, Chairman Lee made it clear that agreeing to the rehabilitation plan does not mean agreeing to Edison Motors' business plan. He drew a line by saying, "Judgment on business feasibility is a matter of the future, and the rehabilitation plan is about repaying current debts, so they are separate issues." He expressed concerns about Edison Motors' method of acquiring Ssangyong Motor. Chairman Lee said, "The worst structure in corporate acquisition is leveraged buyout (LBO), and it seems to be heading that way, so we will closely monitor how much funding Edison Motors provides and how much fresh money they inject."

The sale of HMM shares is expected to proceed in stages. Chairman Lee explained, "In the case of HMM, the combined shares held by the Korea Ocean Business Corporation and us amount to 70%, and if we hold all of them, sale is impossible," adding, "The task is to reduce the shareholding ratio to a level where finding an owner is smooth. The excess portion needs to be sold off gradually."

Regarding the extension of the sales contract for KDB Life Insurance, Chairman Lee said he plans to decide after reviewing the progress of the approval for changes.

Regarding presidential candidate Yoon Seok-yeol's pledge to relocate the Korea Development Bank to Busan, he expressed the view that it goes against financial development. He said, "Finance or industrial ecosystems are not problems solved by money alone; finance should assist when fundamental infrastructure, technology, and business feasibility are in place. Relocating to the provinces is a reversed logic," adding, "It's like putting the horse after the carriage and trying to pull it."