Preferred bidder E-Land gives up in last-minute talks


Ssangyong Engineering and Construction has failed again to find a new owner as its largest shareholder, Korea Asset Management Corp., and the preferred bidder E-Land Group could not reach an agreement in last-minute talks on Monday.

At a subcommittee meeting held on the day, the Financial Services Commission decided to suspend the sale of the financially troubled builder Ssangyong E&C, citing a huge difference between the two parties.

“E-Land asked for enhanced insurance, demanding a further price cut. We cannot accept a deal at a dirt-cheap price,” said a KAMCO official.

On Aug. 2, the state-run financial regulator FSC selected E-Land, a leading Seoul-based fashion retailer, as a preferred bidder to acquire Ssangyong E&C.

KAMCO had continued discussions with E-Land to sell its 50.07 percent stake for 90 billion won ($80 million) and issue new shares worth 150 billion won via a third-party allotment.

However, the talks ― the fifth failed attempt in finding a new owner for the builder ― ended without any agreement.

E-Land is said to have given up the bidding, citing the construction industry’s prolonged sluggish sales and that the potential acquisition could lead to weakening the company’s financial structure.

KAMCO is required to return its shares to the government by Nov. 22 when its operation of the non-performing claim resolution fund expires. After that, the sale of Ssangyong E&C is expected to face a long, bumpy road.

Unless a new financial injection is made by KAMCO, industry watchers say, Ssangyong E&C could go into court receivership as its corporate bond worth more than 100 billion won is supposed to expire this year.

The company’s weak financial strength has long been criticized, considering its market status as the nation’s 13th-largest builder in construction capacity.

The builder holds 148.8 billion won in assets, lagging far behind other major builders here such as Daewoo with 1 trillion won, Doosan with 220 billion won and POSCO with 500 billion won.

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 let go of the company.

Some foreign entities had showed interest in acquiring the company for its top engineering expertise and extensive overseas network. But most domestic builders are not in a position to finance the acquisition in the wake of a continued housing market slump.

By Lee Ji-yoon (jylee@heraldcorp.com)