To Ride Out Current Crisis
Doosan Group is under pressure from state-run banks to come up with an intensive restructuring plan in return for the massive financial support for troubled Doosan Heavy Inducstries & Construction.
Doosan Group plans to submit to the creditors a self-help plan by April 27. The plan will include measures for cost-cutting and sales of non-essential businesses.
The creditors are expected to assess the self-help plan and conduct thorough due diligence before deciding whether to sign a voluntary agreement on co-receivership with Doosan Heavy Industries & Construction
In this regard, Doosan Group is considering selling off 51 percent of the stakes in Doosan Solus held by Doosan Corp. and other related entities. Doosan Corp. holds a 17 percent stake in Doosan Solus while Doosan Group chairman Park Jung-won and other related shareholders own a 44 percent stake.
As the group's owner family has a large stake in Doosan Solus, they will be able to sell off part of their stakes and invest the proceeds from the sale in Doosan Heavy Inducstries & Construction.
"To increase the attractiveness of the stake put up for sale, the owner family cannot help but hand over the management rights," an industry insider said.
Doosan Solus is a blue-chip company which produces materials for displays, copper foils, battery foils, and the bio-tech industry. Hanwha Investment & Securities said that Doosan Solus is Doosan Group’s core growth axis. It added Doosan Solus’ earnings are expected to grow rapidly starting with full-scale battery foil sales in the second half of in 2020. In 2019, Doosan Solus posted 236.3 billion won in sales and 38.1 billion won in operating profit.
In this regard, some analysts say that Doosan Group will only sell off some of its stake in Doosan Solus not to undermine its future growth potential seriously.
The sale of some of Doosan Heavy Industries & Construction's business divisions is one of the hot issues being steadily discussed among industry experts. As Doosan Heavy Industries & Construction announced a plan to increase the proportion of new businesses to 50 percent, the seawater desalination business and plant business of Doosan Mecatec and the Nuclear Power Plant Business Division’s forging business are possible offerings, they say. Among these businesses, the freshwater plant business is recognized for its technological prowess along with the nuclear power plant business and also has cost competitiveness, so they are highly likely to be included in the self-rescue plan. They expect that the Doosan Group will be able to secure about 200 billion won to 300 billion won by selling off its seawater desalination business.
Doosan Group is also considering selling off the distribution division (Doota Mall), the distribution division (Doota Mall) of Doosan Corp. However, some experts say that Doosan Mall is tied to big loans so selling it off will hardly help the Doosan Group secured much-needed funds.
They also expect the restructuring of its workforce to be a key item of the self-help plan. In order to reduce fixed costs, the Doosan Group will extend the suspension of its business operations to some of its loitering workforce. Doosan Heavy Industries & Construction is seeking retirements of some idle workers after receiving voluntary retirement applications from 2,600 employees aged 45 or over. In addition, another hotly debated idea is to leave Doosan Construction only under Doosan Heavy Industries & Construction by dividing Doosan Heavy Industries & Construction into an operation company and an investment company and merging the investment company with Doosan Corp. or that Doosan Corp. takes over a 36.27 percent stake in Doosan Infracore's stake from Doosan Heavy Industries & Construction.