Daewoo E&C Creditors Withdraw Lawsuit, Set to Revive Sale Process

Strategic Insights -

Creditors of South Korea's No. 3 builder, Daewoo Engineering & Construction Co. (Daewoo E&C), have withdrawn their lawsuit seeking repayment of a US$530 million loan on behalf of a former affiliate. The decision comes after reviewing the breakup process of Daewoo Corp., the trading arm of the now-defunct Daewoo Group. The withdrawal of the suit is expected to revive the sale process of Daewoo E&C, with the main creditor, Korea Asset Management Corp. (KAMCO), holding a 44% stake in the builder.

Key Takeaways:

  • Creditors of Daewoo E&C have withdrawn their lawsuit seeking repayment of a US$530 million loan on behalf of a former affiliate, Daewoo America.
  • The decision was made after reviewing the breakup process of Daewoo Corp., the trading arm of the now-defunct Daewoo Group.
  • KAMCO holds a 44% stake in Daewoo E&C, with eight other creditors holding an additional combined 28% in the builder.
  • Daewoo America was left with the debt in 2000 when Daewoo Corp., was split into three companies.
  • Daewoo E&C was criticized for obtaining "sound assets" from the divestiture of Daewoo Corp. in the lawsuit.
  • The withdrawal of the suit will revive the sale process of Daewoo E&C, with the company's spokesman expressing happiness at the decision.
  • Daewoo E&C recorded a net profit of 247.7 billion won (US$245.72 million) upon sales of 4.78 trillion won last year.

Statistics:

  • US$530 million: The amount of loan being sought by Daewoo America from Daewoo E&C.
  • 42%: The combined stake of creditors in Daewoo E&C after the withdrawal of the lawsuit.
  • 2000: The year Daewoo America was left with the debt after Daewoo Corp.'s breakup.
  • 247.7 billion won: Daewoo E&C's net profit last year, upon sales of 4.78 trillion won.
  • 44%: The stake of KAMCO in Daewoo E&C.

Sources:

  • Korea Asset Management Corp. (KAMCO)
  • Daewoo E&C
  • Yonhap