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THE INVESTOR
December 12, 2018
Big Reunion

Industrials

Doosan Infracore loses drag-along suit against PEFs

  • PUBLISHED :February 22, 2018 - 16:13
  • UPDATED :February 23, 2018 - 10:18
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[THE INVESTOR] Doosan Infracore, Korea’s leading construction equipment maker, on Feb. 21 lost in the nation’s first drag-along suit filed by its financial investors seeking to recoup their investments in its Chinese unit.

The Seoul High Court ordered Doosan to pay 10 billion won (US$9.20 million) as compensation to the investors, overturning a lower court ruling.

A consortium of investors, including Mirae Asset Private Equity, IMM Private Equity and Hana Financial Investment Private Equity, had claimed 14.5 billion won as compensation to collect part of their 380 billion won investment to purchase a 20 percent stake in Doosan Infacore China back in 2011. 




The Chinese unit had planned to go public in three years but failed to do so due to China’s prolonged economic slowdown. The investors exercised their drag-along rights that allow shareholders to sell a company with minimal board involvement if their investment requirements are not carried out properly. The sell-off talks also collapsed in 2016, the investors claimed, because Doosan was reluctant to cooperate with the deal process.

Doosan said it is seeking to appeal the decision after a careful review. The amount of compensation was based on Doosan’s preferential rights to acquire the Chinese unit when it is up for sale.

Following the latest ruling, shares of Doosan Infracore tumbled 4.37 percent to close at 9,850 won on Feb. 22.

By Ahn Sung-mi (sahn@heraldcorp.com)

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