Daewoo E&C Faces Lawsuit Over $530 Million Loan Repayment

Daewoo Engineering & Construction Co. (Daewoo E&C) is facing a lawsuit from its creditors over the repayment of a US$530 million loan. The creditors, led by Korea Asset Management Corp. (KAMCO), have filed a lawsuit in a New York district court, claiming that Daewoo E&C has a joint responsibility to repay the debt. The creditors argue that Daewoo E&C has obtained "sound assets" from the divestiture of its parent company, Daewoo Corp., and should therefore repay the loan. Daewoo E&C has criticized the lawsuit as "total nonsense," stating that the creditors agreed to take responsibility for Daewoo Corp.'s debt when signing the agreement on its split.

Key Takeaways:

• The lawsuit is filed by a group of nine creditors led by Korea Asset Management Corp. (KAMCO), demanding that Daewoo E&C repay a US$530 million loan on behalf of Daewoo America.
• The creditors argue that Daewoo E&C has a joint responsibility to repay the debt due to its acquisition of "sound assets" from Daewoo Corp.'s divestiture.
• Daewoo E&C has denied the allegations, stating that the creditors agreed to take responsibility for Daewoo Corp.'s debt when signing the agreement on its split.
• The lawsuit comes as efforts to sell Daewoo E&C are underway, with a consortium led by Samsung Securities Co. chosen to arrange the sale of a controlling stake.
• Daewoo E&C logged 192 billion won ($176.06 million) in net profit for the first nine months of this year, up 41 percent from a year earlier.

Statistics:

• US$530 million: the amount of loan that Daewoo E&C is being sued for repayment.
• 192 billion won: Daewoo E&C's net profit for the first nine months of this year.
• 41 percent: the increase in Daewoo E&C's net profit compared to the previous year.
• 9 months: the time period covered by Daewoo E&C's net profit.

Sources:

• Asia Pulse
• Yonhap