Lee Dong-geol Criticizes Opposition to Daewoo Shipbuilding-Hyundai Heavy Merger: "Is Independent Survival Possible?"

"HMM Normalization Judgment Is Still Premature"... Gradual Stake Sale Planned
Request for Fair Trade Commission to Actively Intervene Amid Delays in Korean Air-Asiana Airlines Merger Review
Regarding Ssangyong Motor Embezzlement Controversy, Judged "Practically Impossible"

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] Lee Dong-geol, Chairman of the Korea Development Bank (KDB), on the 13th, sharply criticized the labor unions and local communities opposing the merger of Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries, asking, "Is independent survival possible?"

At the '4th Anniversary Press Conference' held online that day, Chairman Lee stated, "If Daewoo Shipbuilding & Marine Engineering can present a way to survive independently without financial support, I will personally persuade the government and hand it over (to the labor unions and local communities)."

DSME and Hyundai Heavy Industries are currently awaiting the merger review results from the European Union (EU) competition authorities. However, labor unions and local communities have strongly expressed their opposition by protesting in front of the EU competition authorities. According to Chairman Lee, this is reported to negatively affect the approval of the corporate merger review.

Chairman Lee lamented, "The issue of industrial restructuring is not being supported domestically," adding, "If the merger review of the two companies is not approved, who will take responsibility? Will KDB be held accountable again at that time?"

He further added, "I do not know how far we should accept demands that do not take responsibility, such as whether DSME must remain forever under KDB."

When asked about short- and long-term plans related to the sale of HMM, he drew a clear line, saying, "There are no separate ongoing matters." However, he elaborated that to facilitate future smooth mergers and acquisitions (M&A), the bank's shares should be gradually sold off.

Chairman Lee explained, "I think the shareholding should be gradually reduced to create conditions for sale," adding, "However, the sale of shares will be decided considering government policies and market conditions." Regarding the handling of perpetual bonds, he added, "The five-year plan for shipping industry reconstruction is underway, and decisions will be made after consultation with the government. For now, HMM's normalization is the priority."

Chairman Lee also expressed concerns about the recent HMM situation, which was on the verge of a strike. He said, "Although HMM has returned to a profit trend due to the shipping boom caused by COVID-19, it cannot be considered a stage for relief," pointing out, "While labor-management efforts contributed to HMM achieving its highest operating performance, the favorable market conditions such as container ship orders played a bigger role, which should not be overlooked."

He added, "There are concerns about whether profits will be made or deficits will return when shipping rates normalize next year and the year after," and lamented, "During recent labor-management wage negotiations, some seem to think that the difficult times are over and only celebrations remain, which is regrettable."

HMM, the largest container shipping company in Korea, is expected to break its record for the highest performance in the third quarter of this year. The unprecedentedly high shipping rates are expected to continue soaring at least until the end of the year, and HMM's operating profit for this year is projected to exceed 6 trillion won.

Regarding the controversial rushed sale of Daewoo Engineering & Construction, he responded, "I have received reports that there are no major legal issues." Chairman Lee said, "KDB Investment is currently investigating the sale process of Daewoo Engineering & Construction, but I understand that KDB Investment has done its best to be as fair and transparent as possible under the given conditions."

Regarding the delay in the merger review between the two major airlines, Korean Air and Asiana Airlines, he emphasized the role of Korea's competition authorities such as the Fair Trade Commission. Chairman Lee said, "I hope our Fair Trade Commission will directly persuade other competition authorities as well," adding, "We feel somewhat disappointed and regretful as it seems we are just watching or waiting to decide."

He also said, "I am cautious because I might be accused of the so-called 'resentment crime,' but I publicly suggest that this be viewed positively for the survival of Korea's aviation industry and securing global market competitiveness."

Regarding the appointment of a former Blue House official without financial experience as the head of Korea Growth Investment Corporation, which is responsible for the 20 trillion won Korean New Deal Fund, he replied, "KDB holds an 8.7% minority stake in Growth Investment Corporation," adding, "I would like to mention that we have traditionally respected the independent responsible management of Growth Investment."

In response to concerns that the acquisition battle for SsangYong Motor is not for corporate rehabilitation but for so-called 'eat-and-run' real estate development profits, he said, "Considering that relocating the factory site takes at least 10 years, it is not an easy task." Chairman Lee added, "Changing the use of the factory site is very difficult, so the risk of real estate speculation is low," emphasizing again, "KDB hopes for the prompt normalization of SsangYong Motor and stresses the importance of the emergence of sincere new investors and the cooperation of labor and management to support this."

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