Alternatively, they may put Daewoo's prime assets first on the market. Back in 2016, KDB-led creditors reviewed selling Daewoo's shipyards and offshore plant businesses, instead of selling the company as a whole.
Creditor banks of South Korea's Daewoo Shipbuilding & Marine Engineering Co. (DSME) are mulling new ways to find a new owner of the debt-ridden shipbuilder, including putting its prime assets first on the market, after their second attempt to sell the shipyard was blocked by the European Commission.
On Thursday, the commission vetoed the proposed combination of Hyundai Heavy Industries Co. and Daewoo Shipbuilding due to monopoly concerns. It said the two Korean shipbuilders are among the three largest players in the very concentrated market of large liquefied natural gas (LNG) carriers.
The EU's rejection nullified their planned merger which needed to be cleared by all six countries, under the terms of the agreement signed with Daewoo's main creditor Korea Development Bank (KDB).
Next week, the state-run KDB Chairman Lee Dong-gull will unveil detailed plans to find a new owner of Daewoo Shipbuilding from the private sector, according to people with knowledge of the matter.
They are looking at three options. First, they may tap Korean conglomerates such as Hanwha, Hyosung and POSCO to sell Daewoo Shipbuilding in its entirety. But such a scenario seems to have a low chance of being realized, given Daewoo's poor financial conditions, industry watchers said.
With the shipbuilding industry making a strong post-pandemic recovery, Daewoo Shipbuilding's labor union and company officials last year voiced confidence about remaining a standalone entity, which KDB's Chairman Lee doubted.
Daewoo's debt-to-equity ratio stood at nearly 300% as of the third quarter of last year. Its operating loss in 2021 is estimated to have surpassed 1 trillion won on the back of steel sheet price hikes.
Despite its bulging order backlog in the shipbuilding supercycle, the orders will translate into earnings over the next two to three years.
Write to Jung-Hwang Hwang and Kyung-Min Kang at email@example.com
Yeonhee Kim edited this article.