Doosan Construction, 250 Billion KRW Third-Party Allocated Paid-in Capital Increase... Financial Structure Improvement

[Asia Economy Reporter Lim Jeong-su] Doosan Construction is conducting a third-party allotment capital increase worth 250 billion KRW. The strategy is to improve the financial structure by raising new capital while securing operating funds and investment capacity.

On the 24th, Doosan Construction announced that it will carry out a paid-in capital increase by issuing 182,615,048 new shares worth approximately 250 billion KRW to The Janice Holdings (Ltd.). The Janice Holdings is a newly established corporation funded by Weave Holdings (Ltd.). The new shares will be fully escrowed at the Korea Securities Depository for one year from the delivery date.

Since the 2008 financial crisis, Doosan Construction has focused on restructuring and stabilizing its financial structure due to the deterioration of large-scale project viability over the past several years. Total borrowings and net borrowings have significantly decreased from about 2.4 trillion KRW and 1.7 trillion KRW in 2010 to around 210 billion KRW and 100 billion KRW respectively by the end of the third quarter this year, greatly improving the financial structure.

Doosan Construction, which had recorded operating losses for a long time, showed improved business performance due to reduced interest expenses from decreased borrowings and cost improvements. It achieved profits for three consecutive quarters, recording 16.9 billion KRW in the first quarter, 24.1 billion KRW in the second quarter, and 13.3 billion KRW in the third quarter this year.

Net profit has also been positive every quarter. The cumulative interest coverage ratio stands at 2.6 times, reaching the highest level in the past 10 years, demonstrating a stable profit structure.

A Doosan Construction official explained, "Due to losses from sales during the restructuring process, the debt ratio increased to 429%, leading to undervaluation in the market and disadvantages in construction capability evaluations and credit ratings. Once this capital increase is completed, Doosan Construction’s debt ratio will improve by 193 percentage points to 236%."

Doosan Construction expects improvements in credit ratings and construction capability evaluation rankings due to the improved financial structure. Concerns from clients toward contractors will be significantly alleviated, further strengthening its competitiveness in securing orders. The company plans to reinvest the newly secured cash into the housing business to improve both scale and profitability.

A Doosan Construction official stated, "We will create even greater results with enhanced business and financial competitiveness through this capital increase."

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