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| Singapore’s Marina Bay Sands Hotel built by Ssangyong E&C. (Bloomberg) |
Ssangyong Engineering & Construction, Korea’s 19th-largest building firm by construction capacity, is seeking a new owner again, with high expectations of sealing a deal this time after restructuring its debt.
Ssangyong E&C, which has been under court receivership since early this year as it faced a credit crunch, received letters of intent last week from some eight unidentified buyers from home and abroad.
In July, the builder received formal approval for its comprehensive rehabilitation program from its creditors. The program outlined cash repayment and debt-to-equity swap arrangements on the company’s debt that totaled 850 billion won ($829.4 million).
“Ssangyong still has the ability to secure overseas orders while its debt has been decreasing. Those are the builder’s attractions to the bidders,” an M&A official said.
This is the builder’s eighth attempt to find a buyer since 2007.
Industry experts expect the bidders to fork over between 200 billion won and 300 billion won for the company.
“The undertaking price has dropped to one-third of what it was two years ago. Local midsized firms that do not have a construction unit are also eyeing Ssangyong,” a source familiar with the matter said.
Despite tough challenges, Ssangyong E&C has remained competitive overseas.
It is working on projects worth some $2.9 billion in eight countries, including Indonesia and Malaysia.
In September, Ssangyong won a $300 million order from Equatorial Guinea to build a new airport terminal, a government administrative building and a multipurpose commercial complex.
According to the Construction Association of Korea, 17 of the country’s top 100 construction firms are in a debt workout programs. Among them, six firms ― Ssangyong E&C, Kukdong E&C, Kumho E&C, Namkwang, Hyunjin and LIG E&C ― are currently seeking new owners.
Ssangyong E&C was the firm that built Singapore’s Marina Bay Sands Hotel.
By Park Han-na (hnpark@heraldcorp.com)
