South Korean merger-and-acquisition specialist KH Investment — owner of K Shipbuilding (the former STX Offshore & Shipbuilding) — has been named as the preferred bidder to acquire Daehan Shipbuilding.
Shipbuilding sources said KH Investment has offered state-owned Korea Development Bank (KDB) about $200m for its stake, which is said to be about 90%. Creditors and commercial banks hold the remaining shares.
Managers at K Shipbuilding and Daehan said they had not been told of the decision. KDB officials were not available for comment.
"Being selected as a preferred bidder means the company is in discussions with the seller over the terms and conditions on the sales of the yard," explained a shipbuilding source.
"We understand the takeover process of Daehan will need a few more months to finalise and it could complete within the first half of this year," said a shipyard manager.
KH Investment is new to the shipbuilding business. It became a yard owner early last year when it joined forces with debt clearing house United Asset Management Co (UAMCO) to buy a 95% stake of STX Offshore from KDB and Export-Import Bank of Korea.
The duo was reported to have paid KRW 250bn ($223.4m).
TradeWinds has learned that KH Investment was not the only company in the running for Daehan.
Dongil Steel — a major shareholder in Dae Sun Shipbuilding and Dongbu Corp, the new owner of HJ Shipbuilding & Construction (the former Hanjin Heavy Industries & Construction) — was also keen to acquire the Haenam-based yard.
However, it was said to have pulled out at the last minute without explanation.
Shipbuilding sources said if KH Investment successfully takes over Daehan, it will let the two yards — Daehan and K Shipbuilding — operate independently.
Jinhae-based K Shipbuilding will focus on midsize tankers and LNG ships, and Daehan large vessels.
Brokers said the tanker specialist had recently come up with a design for conventionally-fuelled, 7,000-teu neo-panamax container ships. They added that the yard is temporarily switching its focus to the midsize boxships as it foresees weak demand for tanker newbuildings in the near term.
"Once the demand for tanker newbuildings comes back, it will continue to focus on aframax and suezmax ships," a broker added.
In October, Daehan made its debut in the boxship segment when it struck a deal with domestic owner Pan Ocean to build up to four 1,000-teu container ships. The deal was for two firm vessels with options for two additional ships. The yard is scheduled to deliver the firm vessels in May and July next year.
KH Investment and UAMCO have plans to upgrade facilities at K Shipbuilding to transform it into a "smart" yard capable of building carbon-neutral vessels.
K Shipbuilding is also looking to ride on the strong demand in the midsize container ship newbuilding market. It has come up with a design for 8,000-teu vessels and is a marketing conventionally-fuelled and dual-fuel ships.
Daehan Shipbuilding was established in 2004 during the shipbuilding boom. The shipyard was created by Daeju Group — a real estate company. The shipbuilder is equipped with one dock and two factories.
Daehan started off its shipbuilding activities by building capesize bulk carriers. The Haenam-based shipyard was hit by funding problems in early 2008 following the global financial crisis. It then came under the control of Korea Development Bank.
Daehan is described by shipbuilding players as a “second-tier shipyard” that focuses on suezmax and aframax tankers.
In 2020, the shipbuilder received $53m in loans from Kwangju Bank to help it ride out the order slump that resulted from the Covid-19 pandemic.