[시그널] Doosan wins the 1st trillion DICC lawsuit…’as scheduled for the sale of Infracore’

Supreme Court “I can’t believe there was an obstruction”

The obligation to cooperate is violated… the embers still remain

FI Drag-along event

Doosan Infracore (042670)Won the Doosan Infracore China (DICC) lawsuit, which could bear up to KRW 1 trillion in burden. As soon as the burden of 1 trillion won has been relieved, a green light has been lit even to achieve a self-reliance of 3 trillion won, including the sale of Infracore. However, the Supreme Court acknowledged the purpose of the lawsuit that the Doosan side violated the obligation to cooperate with the due diligence, and it is evaluated as’half victory’. If an external investor of DICC, who lost the lawsuit, immediately exercises the right to claim a companion sale (drag-along), the sale of Infracore will also be entangled.

On the 14th, the 3rd Division of the Supreme Court (Chief Judge Jae-Hyung Kim) sentenced a lawsuit against Doosan Infracore by financial investors (FI) of DICC, such as Mirae Asset Asset Management, Hana Financial Investment, and IMM Private Equity (PE), against Doosan Infracore. At the trial, the case was returned to the Seoul High Court with the purpose of defeating the plaintiff after breaking the court ruling that partially won the plaintiff (FI). It has been about 5 years and 2 months since the lawsuit began in November 2015.

Infracore attracted an external investment of KRW 380 billion to DICC in 2011 on the condition of IPO. At the time, the contract contained an obligation to make Doosan Infracore’s best efforts to publicize the company to the extent that it satisfies the requirements for listing on the stock exchange, and an agreement that shareholders could exercise the right to claim joint sale if the company fails to disclose the company. In response, Doosan has secured preferential purchase rights (call options).

The problem is that after the listing failed, an external investor exercised the right to claim a joint sale, but the sale was missed as Doosan did not cooperate with it. Afterwards, external investors prevented the sale of Doosan in a way that did not cooperate with the due diligence, and for this reason, the Doosan side filed a lawsuit for the payment of stock trading, saying that it had to exercise the priority purchase right. Doosan was given the hands of the first referee and the second referee from external investors.

The Supreme Court decided that Infracore did not interfere with the sale. The court said, “If investors have agreed to the provisions of the’right to request a joint sale’ to secure a plan to recover their investment, the contracting parties are obligated to cooperate with each other.” ‘I can’t say there was.’

Although Doosan won, the fire still remains. The Supreme Court judges that Doosan has violated its duty to cooperate with due diligence. Moreover, external investors still hold a card called the right to sell together. If an external investor exercises this, DICC may be sold to a third party, and in the end, Doosan has no choice but to buy back a 20% stake in the external investor to successfully sell Infracore.

Doosan’s position is that the sale of Infracore will proceed as scheduled. Doosan plans to sign an Infracore Share Purchase Agreement (SPA) with the Hyundai Heavy Industries Holdings-KDB Investment Consortium at the end of this month.
/ Reporter Kim Sang-hoon ksh25th@sedaily.com

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