SEOUL, KOREA - Dongbu Power Dangjin Corp., the centerpiece of the struggling Dongbu Group's restructuring bid, will finally be sold to SK Group after so many twists and turns. According to banking sources on October 29, Korea Development Bank, Dongbu's main creditor bank, has decided to sell the controlling stake currently owned by Dongbu Engineering & Construction to SK Gas.
SK Gas will hold a board of directors meeting on the 30th to get approval for the acquisition. Of the 60-percent stake of the Dangjin power plant, Korea Development Bank will take a 15-percent stake. The total transaction price is estimated at 201 billion won. SK Gas plans to finalize all takeover process by the end of this year after due diligence.
SK Gas, which has looked for new business opportunities for quite some time as the liquefied petroleum gas market is shrunk by the expansion of liquefied natural gas supply, bought a 19-percent stake in Goseong Green Power, a coal-fired thermal power plant in the southeast, in April this year. The bid for the Dangjin plant is also as part of its overriding strategy to move toward the coal-fueled power plant business.
As for the issue of the construction of back-up power transmission lines and the extension of power plant business license that will expire at the year's end, Korea Development Bank and Dongbu E&C will take full responsibility. Under the terms of the agreement, SK Gas has the right to sell back the stake to the bank and the Dongbu Group company if the two issues are not resolved.
After Dongbu Group successfully sells off its power plant asset, it will be able to breathe a sigh of relief in its liquidity situation. Currently the group is trying to sell off Dongbu HiTek, a system semiconductor maker.
Article provided by The Korea Economic Daily
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