Goldman Sachs axed from South Korean shipyard sale

SEOUL : US investment bank Goldman Sachs has been axed as coordinator for the sale of South Korea's Daewoo Shipbuilding and Marine Engineering, the world's third largest shipyard, a creditor bank said Sunday.

The state-run Korea Development Bank gave no reason for the decision. But South Korea's Yonhap news agency earlier reported creditors were unhappy with Goldman Sachs' appointment as main coordinator of the sale because it has a stake in a Chinese shipyard.

Daewoo Shipbuilding went bankrupt in the aftermath of the 1997-98 Asian financial crisis and is now controlled by its creditors, who plan to select a preferred bidder as early as August for their combined 50.4 percent stake.

The shipyard produces submarines, destroyers and other military equipment and Yonhap said military intelligence officials would monitor the sale to prevent leaks of the company's weapons-related technology.

The government also plans to prevent foreigners from taking part in the due diligence, according to an unnamed official quoted by Yonhap.

Hyundai Heavy Industries, the world's largest shipyard, and steel giant POSCO have shown interest in bidding.

The value of the stake held by creditors, currently estimated at some 3.6 billion dollars, has soared due to the company's bright outlook.

Last year it posted a net profit of 321 billion won (307 million dollars), up 4.5 times from the previous year. Sales climbed 32 percent to 7.1 trillion won.

South Korean shipyards have secured record orders last year and this year because of strong demand for crude carriers and offshore exploration equipment amid rising oil prices.

Source: Channelnews Asia