‘Restructuring Top Performer’ Doosan, Will It Keep Its Nickname This Time Too?

[Image source=Yonhap News]

Doosan Group's management normalization plan (self-rescue plan), which centers on asset and affiliate sales and changes in Doosan Heavy Industries & Construction's core business, has tentatively received approval from creditors, maintaining its reputation as a "restructuring model student."

According to business circles and financial sectors on the 20th, Doosan, which received support of 3.6 trillion won, has breathed a sigh of relief as its self-rescue plan to secure liquidity worth 3 trillion won received a positive evaluation from the creditor, KDB Industrial Bank.

Earlier, Lee Dong-gul, chairman of KDB Industrial Bank, and Choi Dae-hyun, vice president, introduced in an online press conference held on the 17th that Chairman Park Jeong-won of Doosan Group recently met with Chairman Lee. Notably, while the bank emphasizes "serious efforts" or "consultations" for other companies receiving support, it generally acknowledges the situation with Doosan, which is already proceeding with the sales process according to its self-rescue plan.

Regarding Doosan's sales direction, Vice President Choi said, "If a deadline is set, the sale will be rushed and may be completed below the expected price, so we will proceed autonomously with time."

Doosan has already put on the market its stake and management rights in Doosan Solus, which operates the battery separator business, Motrol BG, which operates the hydraulic equipment business, the golf course Club Mow CC, and Doosan Tower. Due to the impact of the novel coronavirus disease (COVID-19), corporate investment sentiment has frozen, and a temperature gap between Doosan Group and potential buyers over the sale price has delayed the process more than initially expected.

In response, Doosan Group recently took the bold step of putting up for sale its stake (36.27%) and management rights in Doosan Infracore, which had been a cash cow. Doosan plans to separate Doosan Bobcat, a subsidiary of Doosan Infracore, and keep it intact while selling only Doosan Infracore. Upon news of Doosan Infracore's sale, the business community evaluated it as an attractive asset. China, where COVID-19 peaked in February, is seeing a recovery in the construction machinery market, and since May, the market has exceeded normal levels. Last year, Doosan Infracore recorded separate sales of 3.1 trillion won, operating profit of 178.2 billion won, and net income of 53 billion won.

However, the financial investment industry also notes that there are many variables in the sale of Doosan Infracore, making it premature to be optimistic. The attractiveness of the asset diminishes if Doosan Bobcat is sold separately. Additionally, a lawsuit worth around 700 billion won related to the sale of shares by Doosan Infracore's Chinese subsidiary (DICC) and financial investors (FIs) is still awaiting a Supreme Court decision.

Furthermore, Doosan Group plans to proceed with a business division reorganization of Doosan Heavy Industries & Construction through external consulting verification by September this year. Earlier, following the shareholders' meeting held in March, Chairman Park Jeong-won announced on the 11th of this month that the business structure would be reorganized. Doosan is currently restructuring its business to focus on gas turbines for liquefied natural gas (LNG) power generation instead of its core businesses of thermal and nuclear power generation.

This content was produced with the assistance of AI translation services.