1分6合

This combined photo shows Hanwha Group's headquarters in Seoul, left, and Daewoo Shipbuilding & Marine Engineering's office in Seoul. Yonhap

By Park Jae-hyuk

Hanwha Group is tasked with improving the financial structure of Daewoo Shipbuilding & Marine Engineering (DSME) and handling the shipbuilder's lingering conflict with unionized subcontract workers, according to securities analysts, Tuesday.

Although Hanwha is unlikely to face difficulties in winning approvals here and overseas for the acquisition, concerns remain over how the nation's seventh-largest business group will normalize the debt-ridden shipbuilder, which suffered accumulative losses for the seventh quarter straight.

Last Friday, Hanwha stepped closer to its goal of becoming a global defense industry powerhouse, by signing the 2 trillion won ($1.5 billion) main deal for the acquisition of a controlling 49.3 percent stake in DSME from Korea Development Bank (KDB), a state-run lender that leads the shipbuilder's creditors. There is also a mood of cautious optimism about the normalization of DSME, which has been under the control of creditors since Daewoo Group was disbanded in 2000 as a result of the Asian financial crisis.

Given that Hanwha has never owned a shipbuilder, both buyer and seller expect it will not take long for the acquisition to get approvals from the Fair Trade Commission, as well as antitrust regulators in the European Union, Japan, China, Singapore, Turkey, Vietnam and the U.K. When Hyundai Heavy Industries sought to take over DSME in 2019, the acquisition was vetoed by the EU, due to concerns over a possible monopoly.

"We expect the approval for their deal to be finished in the near future," said KDB, which will be the second-largest shareholder of DSME with a 28.2 percent stake after the takeover is completed.

Yuanta Securities analyst Choi Nam-kon, however, raised concerns over the financial structure of DSME, which suffered a 1.19 trillion won operating loss during the first three quarters of this year and showed a 1,290 percent debt-to-equity ratio as of the end of the third quarter.

"The shipbuilder will be exposed to the burden of high interest rates, because most its loans will mature in the near future," he said. "The size of DSME's short-term debt is around 2.9 trillion won."

In addition, DSME's unionized subcontract workers, who were asked to compensate the company with 47 billion won for their 51-day strike earlier this year, have asked the shipbuilder's new owner to retract the damage claim. The subcontract workers have been making the request since holding a rally in October in front of Hanwha headquarters in Seoul.

"Hanwha had several meetings with DSME's unionized regular employees, but it has totally ignored us until it signed the main contract," the subcontract workers said in a statement last Friday.

Hanwha has formed an amicable relationship with the union of DSME's regular workers. After the conglomerate accepted the union's requests to guarantee job security and comply with the collective agreement signed with DSME, the unionized worker did not hinder the buyer's due diligence.

Although the DSME union had once urged the buyer not to replace CEO Park Du-seon and other executives until the end of their terms, Hanwha is now expected to dismiss most of the shipbuilder's incumbent executives. Former Hanwha Energy CEO Jung In-sub has been mentioned as the possible new DSME CEO, considering the fact that he directed the acquisition procedure.

In response to concerns over potential difficulties in normalizing DSME, Hanwha has maintained a cautious stance, as the acquisition has not been completed yet.

"Communicating with various stakeholders, including relevant institutions, creditors and the union, we will successfully finish the remaining acquisition procedures," the conglomerate said in a press release.