Input 2021.01.14 13:18 | Revision 2021.01.14 13:27
However, there is a high possibility that FIs will again exercise the “Drag Along” of DICC to third parties, which is interpreted as an important variable in the future sale of Doosan Infra. The right to ask for a joint sale is the right for investors to pull up the company’s stake and promote the sale if the company fails to fulfill the investment conditions. This lawsuit attracted the attention of the industry as it was the first lawsuit in Korea over the right to request a joint sale between a company and an investor in a contract between shareholders.
On the 14th, the 3rd Division of the Supreme Court (Presiding Judge Kim Jae-hyung) filed a court case requesting to pay 10 billion won in a lawsuit for the payment of the trading price of Doosan Infracore, including Mirae Asset Asset Management, IMM PE, and Hana Financial Investment It was destroyed and the case was returned to the Seoul Court for the purpose of losing the plaintiff.
The Supreme Court said, “If the right to request a joint sale is agreed, we are obligated to cooperate with each other.” I did it.
The consortium of Hyundai Heavy Industries and KDB Investment also announced its position to complete the acquisition of Doosan Infracore without a hitch. Last month, the two sides agreed that Doosan Infracore will in principle raise funds for contingent liabilities related to the DICC litigation, and Doosan Heavy Industries & Construction will pay the amount shared by the consortium of HHI holdings.
An official of Hyundai Heavy Industries Group said, “Because this is an issue that was recognized from the beginning in the process of promoting the merger and acquisition, there will be no schedule change due to the outcome of the lawsuit.” “He said. The Hyundai Heavy Industries consortium plans to sign an SPA by the 31st and close the transaction within 4 months.
However, even if Doosan wins the final victory, the right to request a joint sale from the IPO failure that it promised FI 10 years ago remains the same. Doosan Infracore attracted investments in DICC to target the Chinese market in 2011. At that time, FIs acquired a 20% stake in DICC for 380 billion won. An IPO within three years was a condition, and if the promise was not fulfilled, the contract also included a provision for a joint sale request that FI could bind up to 80% of the DICC’s stake in Doosan Infracore and sell it to a third party.
However, as earnings deteriorated due to the Chinese construction market slump, Doosan was unable to achieve an IPO within the deadline. Afterwards, the FIs exercised the right to request a joint sale and went on public sale, but it was unsuccessful. FIs filed a lawsuit saying, “Doosan failed to recover the investment because it did not cooperate with the sale, such as due diligence.” Doosan Infracore’s side argued that the IPO’s failure was an unavoidable result of the economic downturn and that investors’ arguments were different from the facts, saying that the sale proceeded normally.
In 2018, the High Court ruled that Doosan Infracore reimburse FI’s investment principal (380 billion won) plus an annual internal rate of return (IRR) of 15% compounded. If delayed interest is reflected here, the amount reaches up to 1 trillion won.
Doosan Infra won the victory after a lawsuit that led to the Supreme Court, but the rights of FIs to request a joint sale remain. It is reported that FIs plan to re-exercise the right to request a joint sale in the near future. DICC sold 18,686 excavators in China last year, reaching the highest level in 10 years.
Eventually, negotiations between the FI, which must recover the investment, and the Doosan Group, which must complete the self-reliance plan, are expected to continue again. An industry official said, “The ruling on this day leaves a question of how FIs will recover their investments.” I can see it.”