Wednesday, October 9, 2024
HomeEquipmentDoosan Group to put up Infracore Division for sale assets

Doosan Group to put up Infracore Division for sale assets

Doosan group is reported to be planning to sell its stake in construction equipment manufacturer Doosan Infracore to raise funds to repay loans.

The companies are finding it difficult to keep up with the recent slowdown in the market, in this regard there is confirmation of Dosan selling stake in Doosan Infracore. Doosan group is reported to be planning to sell its stake in construction equipment manufacturer Doosan Infracore to raise funds to repay loans.  South Korea’s Doosan Group has opted to divest assets including Doosan Infracore Co., its lucrative construction equipment making unit, to meet the state rescue requirements for Doosan Heavy Industries & Construction Co.

Based on Doosan Infracore’s share price in mid-June, the shares could be worth US$660 million.

According to multiple press reports in South Korea the group received a 3.6 trillion won (€2.67 billion) emergency loan from the state-owned Korea Development Bank, after bailing out its engineering arm, Doosan Engineering & Construction, which suffered losses from unsold real estate.The 36.27% stake in Doosan Infracore held by Doosan Heavy Industries & Construction is the sole interest Doosan group has in the construction equipment and diesel engine producer. The rest of the shares are free float and held by a variety of institutional, individual and foreign investors.

Doosan Corp., the holding company of the Korean conglomerate, has tapped Credit Suisse to arrange the sale of Doosan Heavy I&C’s 36.27 percent stake in Doosan Infracore. The deal would not include Doosan Infracore’s 51.05 percent stake in Doosan Bobcat, the U.S.-based construction equipment manufacturer. Shares of Doosan Infracore surged to the daily limit of 29.9 percent to close Tuesday at 7,480 won ($6.2). Doosan Heavy I&C rose 10.4 percent to 5,150 won and Doosan Bobcat gained 18.1 percent to 29,100 won. Parent company Doosan also jumped 15.9 percent to 46,350 won.

Doosan Heavy I&C ran into financial troubles amid scarcity in new orders after the government canceled new thermal and reactor projects as part of a new energy plan to phase out fossil and nuclear fuel. In return for the state bailout, Doosan Group had promised to secure 3 trillion won through asset sales.

Doosan Infracore is Korea’s biggest construction equipment maker and a crown jewel of the conglomerate. Doosan Group up until now has resisted pressure from creditors to sell Doosan Infracore and Doosan Bobcat. Analysts say Doosan Infracore, with a market cap of 1.3 trillion won, is a prime target for many strategic investors. The 36.27 percent stake is expected to fetch 800 billion won when including management rights.

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