Input 2020.12.24 13:36
The biggest issue is the site of Hanjin Heavy Industries & Construction’s Yeongdo Shipyard. Yeongdo Shipyard was established in 1937 under the name of Chosun Heavy Industries. It is called’Korea’s No. 1 Joseon’. Apart from historical performance, the sale of the site of the Yeongdo Shipyard is a measure of whether Hanjin Heavy Industries’ shipbuilding business will continue.
As Hanjin Heavy Industries sold the subic shipyard in the Philippines, it became difficult to build a commercial ship. Only the defense division to make military ships remained. There is also no decent site to replace the Yeongdo Shipyard near Busan’s new port. In this situation, if the Yeongdo Shipyard site is developed or sold as real estate, it means that the shipbuilding sector will be abandoned.
The Dongbu Construction Consortium said it would increase Hanjin Heavy Industries’ competitiveness in the shipbuilding sector and not sell the Yeongdo Shipyard site. The Dongbu Construction Consortium issued a statement the day before and said, “As it is possible to build commercial ships with sufficient technology and technical manpower to build a commercial ship in the past, if we reinforce the small and medium-sized commercial ship business portfolio for defense specialty ships and increase the utilization rate, the company’s normalization will accelerate further.” “We are not considering hiring or selling the Yeongdo Shipyard.”
The Dongbu Construction Consortium drew a line, but observations that it will develop the Yeongdo Shipyard site in the long run continues. Korea Land Trust, NH Investment & Securities PE and Opus PE participate in this consortium, led by Dongbu E&C. All of them have a history of real estate development and restructuring, but have never run shipbuilding.
In particular, the area of the Yeongdo Shipyard is 260,000 m2 (about 80,000 pyeong), which is evaluated as being narrow enough to build ships that increase in size. On the other hand, the public opinion is that the value of real estate development is great as it is adjacent to the Busan North Port development area. There is even a story that it can earn up to 1 trillion won in profits when developing real estate. This is twice the size of the Dongbu Construction Consortium’s acquisition of Hanjin Heavy Industries, which spent around 500 billion won. This means that after three years of mandatory maintenance of the shipbuilding industry, pressure for development could increase.
An industry insider said, “Considering not only the employees of the shipbuilding division of Hanjin Heavy Industries, but also the partners, it would be desirable to continue building the ship, but it is not an easy decision given the competitiveness and the value of the Yeongdo shipyard site,” he said, “Would you not pursue a change in usage eventually?” .
When such concerns were raised repeatedly, the city of Busan said that Hanjin Heavy Industries would mobilize administrative power to stop the development of the site without maintaining employment and shipbuilding.
Byun Seong-wan, acting mayor of Busan, said the day before, “The Korea Development Bank, which is a state-owned bank for the purpose of fostering the industry, seems to be based on economic logic focusing on development rather than the future of the economy of Busan and the national infrastructure,” he said. “The Yeongdo Shipyard site In the case of pursuing private interests of development by prioritizing only the real estate value of the company, we will thoroughly block the link that can lead to difficult development by mobilizing all administrative power, such as not allowing repurposed,” he said.
The industry predicts that the Busan market by-election, scheduled for April next year, until the signing of the stock trading contract will be a watershed. An official from the M&A industry said, “Because it is a problem that not only economic logic but also political decision is inevitable, there is a high possibility that the flow of market elections will affect the contents of the contract.”