The Korea Development Bank (KDB) has reached a deal to sell off its controlling stake in Hanjin Heavy Industries and Construction (HHIC), one of the country’s most prominent naval shipbuilders.
KDB said on 15 April that it will sell its 66.85% shareholding in HHIC to a consortium led by the Dongbu Corporation, a civil engineering and construction group. It did not reveal the value of the transaction.
South Korea’s Dongbu Corporation, a civil engineering and construction group, has agreed to acquire naval shipbuilder Hanjin Heavy Industries and Construction, constructor of the Republic of Korea Navy’s PKX-A-class fast attack craft. (HHIC)
KDB said the acquisition is now expected to be complete by August after receiving approvals from South Korea’s Fair Trade Commission, and the Defense Acquisition Program Administration (DAPA).
HHIC has been facing economic pressure for several years: a result of a downturn in sales in commercial shipbuilding and construction sectors. The state-owned KDB has provided financial support for the shipbuilder in recent years in return for shares.
In fiscal year 2018 – the most recent figures that HHIC has announced – the company’s revenues increased year-on-year by 3% to KRW1.69 trillion (USD1.5 billion). However, its losses expanded from KRW278 billion in 2017 to KRW1.32 trillion. While no HHIC sales figures for the defence sector are available, these are expected to have remained relatively strong.
The company’s defence sales are primarily to the Republic of Korea (RoK) Navy and in recent years have included construction of Patrol Killer Experimental-B (PKX-B)-class fast attack craft, landing craft utility (LCU) ships, a training support vessel, and a Dokdo-class landing platform helicopter ship.