This file photo, provided by Doosan Heavy Industries & Construction Co. on Aug. 12, 2020, shows a view of the power plant builder’s plant in Changwon, 398 kilomters south of Seoul.
SEOUL, Dec. 31 (Korea Bizwire) — Cash-strapped Doosan Heavy Industries & Construction Co. has improved its financial health this year by selling new shares and assets and receiving financial help from its holding company Doosan Corp. and key shareholders, a local rating appraiser said Thursday.
“Doosan Heavy has been improving its financial status and reducing its debts on the back of Doosan Group’s self-rescue plan,” NICE Investors Service said in its report.
The rating agency retained Doosan Heavy’s long-term rating at BBB, the lowest tier of investment grade, placing it on the credit watch list due to lingering uncertainties over cash flow.
Shares of Doosan Heavy rose 3.45 percent to close at 13,500 won (US$12.4) on the Seoul bourse on Wednesday, while shares of Doosan Corp., Doosan Group’s holding company, closed down 0.38 percent at 52,400 won.
In March, Doosan Heavy borrowed cash worth 3 trillion won from its creditors and state-run banks — the Korea Development Bank and the Export-Import Bank of Korea — to brace itself for its short-term debts worth 4.2 trillion won, which should be paid within this year.
The leading power plant builder underwent a liquidity crisis due to its failed business reorganization and its continued cash injection into the group’s financially troubled construction affiliate Doosan Engineering & Construction Co.
Some analysts said the power plant builder has failed to keep up with the times, as the overall size of the global coal-fired power plant market has been contracting since the Paris Agreement, a landmark environmental deal adopted in 2015 to reduce greenhouse gas emissions.
On Sept. 4, Doosan Group made public its plan to repay the 3 trillion-won debt of Doosan Heavy by selling new shares and assets of the power plant builder and assets of the holding company Doosan.
Under the plan, the group has secured about 4 trillion won so far this year.
Doosan Heavy raised 1.4 trillion won through the sales of new shares and its golf course. Doosan Heavy is expected to additionally raise 800 billion won next month by selling construction equipment maker Doosan Infracore Co.
This file image provided by the Seongnam government shows Doosan Group’s new building in Bundanggu, Seonganm, just south of Seoul.
Doosan Heavy increased its equity as 13 key shareholders, including Doosan Group Chairman Park Jeong-won, provided their 23 percent stake in Doosan Fuel Cell Co., the group’s fuel cell maker, to the power plant builder for free.
The free provision of the stake helped lower Doosan Heavy’s debt-equity ratio.
They also sold their 34.88 percent stake in battery foil maker Doosan Solus Co. to help the cash-squeezed power plant.
In a bid to provide financial support to Doosan Heavy, the holding company Doosan sold its assets, including the group’s headquarters building Doosan Tower, its venture capital company Neoplux Co., its oil pressure machine maker Doosan Mottrol and its 18.05 percent stake in Doosan Solus.
Doosan raised 1.56 trillion won via the asset sale and spent 435 billion won to buy new shares of Doosan Heavy.
Doosan Heavy has been reportedly seeking to sell an unspecified amount of its stake in Doosan Engineering & Construction, as the construction unit sparked off the financial problems of Doosan Heavy.
Still, Doosan Heavy said no decision has been made yet.
On top of asset sales, Doosan Heavy cut about 1,000 jobs as part of its efforts to tide over its cash shortages this year, a company official said.
In line with the asset sales, Doosan Heavy has been pushing ahead with its plan to shift its business line to gas turbines, renewable energy and hydrogen and fuel cells from coal-fired power plants.
(Yonhap)
