Hanwha Asset Management, the underwriter preparing for a pre-IPO of Bobcat, the U.S.-based manufacturer of small farm and construction equipment and a subsidiary of Doosan Infracore, has begun its effort to persuade potential investors by offering a roadmap to pay down the Korean company's debt to 1-trillion-won level from more than 5 trillion won now.
The roadmap also included an alternative plan to sell off profitable assets if the company fails to raise funds through an IPO of Doosan Infracore Bobcat Holdings (DIBH), the holding company of Bobcat. In addition, the asset management firm added to the roadmap a "step-up" provision so that investors would be able to earn an increasingly higher rate of dividends up to 15 percent in stages.
According to investment banking sources on June 17, Hanwha Asset Management is working hard to enlist potential investors ahead of the pre-IPO of Bobcat by sending out long-term financial standing improvement plans to major pension funds and securities firms. According to these plans, Doosan Infracore will sell off its core assets if it is unable to take DIBH public within five years' time. The estimated volume of money Doosan Infracore will be able to raise from selling the assets is 1.6-1.8 trillion won.
If the company succeeds in the capital increase of DIBH worth 800 billion won currently under way and pays down the debt of 1.6 trillion won, the plans envisioned, it will be able to cut the debt by 2.4 trillion won.
The reason the asset management firm put out a high-intensity restructuring plan for its client has to do with the fact that Doosan is having a hard time pulling off the pre-IPO of Bobcat, the first obstacle for Doosan Group to clear in improving its financial standing. Presently, major pension funds including the National Pension Service are reluctant to take part in the pre-IPO due to the shaky financial structure of Doosan Infracore and poor results of Doosan Infracore China.