Hanwhas Daewoo deal turns sour

The 6.3 trillion won deal to sell a controlling stake in Daewoo Shipbuilding & Marine Engineering to Hanwha Group collapsed yesterday on differences over payment terms. Korea Development Bank decided to scrap the planned sale after Hanwha insisted on easing of the initial payment schedule. “We came to the judgement that negotiations with Hanwha would be difficult to continue,” a KDB official said. “Hanwha’s 300 billion won ($220 million) deposit will be seized.”

The decision was made by the state-run lender’s board yesterday and the KDB will make an official announcement today, the official said. Hanwha Group said it was not officially notified by the seller of any decision. Sources at the conglomerate said the group has already started studying ways to recover at least a part of the deposit and a lawsuit is likely.

Hanwha signed a preliminary deal with the KDB to buy a 50.4% stake in Daewoo Shipbuilding and although the acquisition price was not disclosed, it was widely said to be 6.3 trillion won. The conglomerate has proposed to pay half of the acquisition price by the 30 March deadline while insisting on flexibility on the payment of the remaining half. The original agreement stipulates completion of payment by the deadline.