Environmental Energy and More?‥Doosan Under Pressure from Creditors

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Doosan Group, which is implementing a financial restructuring plan worth 3 trillion KRW, is struggling under pressure from creditors to restructure its business around the eco-friendly energy sector. If Doosan Group complies with the creditors' demands and reorganizes its affiliates, it will have to put up for sale not only Doosan Infracore, a core affiliate of the group, but also Doosan Bobcat and others.

According to the business and financial sectors on the 23rd, Doosan Group is proceeding with business restructuring in line with the creditors' demands. Doosan Heavy Industries plans to conduct due diligence by September based on external consulting and then restructure focusing on eco-friendly businesses. Doosan Group is also setting its reorganization direction around gas turbine power generation and renewable energy businesses such as wind power.

Accordingly, all affiliates unrelated to the energy business, including Doosan Infracore, in which Doosan Heavy Industries holds a 36.3% stake, Doosan Construction, and the golf course Club Mow CC, have been listed as sale targets. Doosan Corporation has also put its Motrol BG (business group) and Industrial Vehicle BG business units on the market. It is known that the market estimates the appropriate negotiation price for the sale of Doosan Infracore's shares at around 800 billion KRW.

This reflects a recent shift in Doosan Group's stance toward "selling almost everything" in response to the creditors' demands. Initially, Doosan Group planned to sell non-core affiliates and idle assets such as its battery foil company Doosan Solus shares and Doosan Tower. However, although they planned to sell a 61% stake in Doosan Solus along with a management premium for around 800 billion KRW, potential buyers have refrained from bidding due to concerns over financial difficulties caused by the COVID-19 pandemic, putting Doosan Group at a disadvantage.

Industry insiders are concerned that if Doosan Group sells off its strong companies to save Doosan Heavy Industries as demanded by creditors, the company will shrink drastically. If all affiliates and business units put up for sale to save Doosan Heavy Industries are sold, the company's scale will significantly decrease. Of Doosan Group's consolidated sales of approximately 18.5357 trillion KRW last year, Doosan Heavy Industries' own sales accounted for about 5.9507 trillion KRW. Meanwhile, Doosan Infracore and Bobcat recorded sales of 8.1858 trillion KRW last year. Doosan Infracore alone, currently up for sale, posted individual sales of 3.1 trillion KRW last year. Additionally, Motrol BG and Industrial Vehicle BG recorded combined sales of about 1.475 trillion KRW last year.

Moreover, Doosan Heavy Industries' order volume is gradually decreasing, raising questions about whether it has the capacity to endure until its gas turbine and wind power businesses stabilize. In particular, the core new industry, gas turbines, is currently undergoing trial operations and will take about 2 to 3 years to be fully commercialized. A source from the power generation industry said, "Even if Doosan's gas turbines are commercialized, it will take longer to build a portfolio for overseas orders," adding, "If other affiliates are hurriedly put up for sale, the company might have to worry about day-to-day survival immediately."

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