Doosan Heavy Industries & Construction said on Dec. 12 that it would delist its loss-making apartment builder arm Doosan Engineering & Construction from the Korea Exchange’s main board Kospi and wholly own the company.
Holding 82.47 percent of Doosan E&C’s voting rights, Doosan Heavy will carry out a stake swap deal on March 10, 2020 that gives Doosan E&C shareholders some 248 Doosan Heavy shares in return for 1000 Doosan E&C shares, according to a disclosure on Dec. 12. Dissenting Doosan E&C shareholders may express opposition to the deal from Dec. 12 to Feb. 7, 2020. No new board members will be elected through the restructuring.
A promotional image of Ilsan We've the Zenith apartment complex
Doosan Heavy valued a Doosan E&C common share at 1,331 won ($1.12), higher than the Dec. 12 closing price at 1,270 won. Doosan Heavy will also buy Doosan E&C’s warrants for 3.9 billion won.
Doosan Heavy said the move is aimed at maximizing synergy effect in the operation of the two companies.
The news came a week after Doosan E&C, known for its apartment brand We’ve, was rumored to be on sale due to illiquidity. Since 2013, Doosan Group has injected a combined 1.5 trillion won in Doosan E&C to address the liquidity issue, to little avail.
Doosan E&C saw its debt-to-equity ratio jump to 552.5 percent as of end-2018, from 194.7 percent in 2017. Its balance sheet also remained in the red. Its net loss came to 11.8 billion won as of end-September. Also, Doosan E&C credit was downgraded from BB to BB-, according to Korea Investor Service. It also changed Doosan Heavy’s credit outlook to “negative.”
By Son Ji-hyoung (email@example.com)