Europe-based M+W continues to express desire to acquire builder


Transparency has emerged as a point of contention surrounding the sale of Ssangyong Engineering and Construction, as the company could be handed over to an investor via a “private contract.”

The possible sale of Ssangyong E&C via this sort of behind-the-scenes contract would be legitimate under the law as the state-run Korea Asset Management Corp., the builder’s biggest shareholder, has already failed to select a preferred bidder twice this year.

Several KAMCO officials also said they have not ruled out the optional sale by scrapping bidding competitions, citing problems in attracting powerful contenders despite a series of attempts over the past several years.

While three investors recently tendered bids for the third bidding, Europe-based M+W Group, a leading global engineering and construction management firm, has been picked as the lead bidder.

“M+W Group, which participated in the past two preliminary biddings this year, also submitted a letter of intent for the third preliminary one this month,” a KAMCO official said.

Based on the LOIs tendered by three investors, KAMCO is considering accepting a detailed proposal in June.

Should M+W continue to express its willingness toward Ssangyong E&C, there is a high possibility that KAMCO will select the group as a single negotiation partner.

The two other bidders are Socius, a local private equity fund, and Shinku Engineering & Construction.

But KAMCO said it has decided to reject the offer from Shinku E&C, saying it is not an eligible investor due to its financial status.

“Market observers will raise the issue of transparency and fairness under the scenario of a private contract,” an official said.

Last March, six Korean and non-Korean companies, including E-Land, expressed an interest in acquiring the builder in the preliminary bidding. But the sales process came to a halt as only M+W participated in the final bidding.

The state-run agency restarted the bidding process in April and only three foreign firms took part.

Following the 1997-98 Asian financial crisis, Ssangyong E&C and other Ssangyong Group units fell into deep financial trouble under mounting debts. KAMCO and other creditors injected capital to rescue the builder in return for company shares in 1999.

Since then, creditors have been attempting to dispose of the company.

Foreign entities are interested in acquiring Ssangyong for its state-of-the-art engineering know-how and extensive overseas network, according to research analysts.

However, most domestic builders are not in a position to spend hundreds of billions of won to take it over in the wake of a continued housing market slump, an analyst said.

By Kim Yon-se (kys@heraldcorp.com)