Doosan Virtually Wins DICC Lawsuit at Supreme Court: "Infracore Deal Proceeding as Planned"

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[Asia Economy Reporter Ki-min Lee] The Supreme Court has effectively ruled in favor of Doosan Infracore in a lawsuit involving financial investors (FIs) surrounding Doosan Infracore's China subsidiary (DICC). As a result, it is expected that Doosan Group's self-rescue plan to sell Doosan Infracore will proceed without major obstacles.

According to the Supreme Court and business circles on the 14th, the Supreme Court's 3rd Division (Presiding Justice Kim Jae-hyung) overturned and remanded the appeal trial of the purchase price claim lawsuit filed by investment purpose companies Odin2, Sinian, Neptune, Hana Jeil No.1, consisting of Mirae Asset Global Investments, IMM Private Equity, and Hana Financial Investment, against Doosan Infracore, ruling in favor of Doosan Infracore.

The court judged that although Doosan Infracore did not fulfill its initial public offering (IPO) obligation, "it is difficult to conclude that Doosan Infracore obstructed the fulfillment of the drag-along (joint sale demand) exercise conditions in bad faith solely because it did not respond to Odin2's request for data provision." The court stated that since the prospective buyer and amount cannot be specified, it is impossible to determine what legal effect arises between the selling shareholder and the counterparty.

In 2011, Doosan Infracore sold a 20% stake in DICC to FIs for 380 billion KRW, promising to list DICC on the Chinese stock market within three years to recover the investment. The shareholder agreement at the time stipulated that if the IPO did not occur, a drag-along right could be exercised. However, the IPO did not materialize, and the DICC sale ultimately failed. The FIs filed a lawsuit claiming that Doosan Infracore limited the scope of data disclosure, preventing the sale from succeeding. The first trial ruled in favor of Doosan Infracore, while the second trial ruled in favor of the FIs.

This ruling is expected to allow the Doosan Infracore share sale contract schedule to proceed smoothly. Last month, both parties agreed that Doosan Infracore would raise funds related to contingent liabilities from the DICC lawsuit, and that the amount borne by the Hyundai Heavy Industries holding consortium would be covered by Doosan Heavy Industries. The Hyundai Heavy Industries consortium plans to sign the stock purchase agreement (SPA) by the 31st of this month and complete the transaction within four months. However, the first phase can be extended by two months, and the second phase can be extended by another two months upon mutual agreement.

A Doosan Group official emphasized, "We will prepare follow-up measures and proceed with the deal related to the sale as planned." A Hyundai Heavy Industries official also stated, "This was an issue Doosan had to resolve, and the ruling does not affect the deal," adding, "We will do our best to finalize the contract."

This victory significantly reduces the risk that Doosan would have to repurchase shares from the FIs, which could have resulted in contingent liabilities exceeding 800 billion KRW. In such a case, selling Doosan Infracore, a cash cow, would not have yielded any cash, potentially impacting the self-rescue plan. However, since the FIs could exercise drag-along rights and impose considerable burdens, Doosan intends to analyze various scenarios and respond accordingly.

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