Hanwha Group companies to fund DSME buyout without external financing

Hanwha Group

Hanwha Group is capable of funding its planned 2 trillion won ($1.4 billion) deal to acquire Daewoo Shipbuilding & Marine Engineering (DSME) without external financing, Hanwha Aerospace reaffirmed on Monday.

Hanwha’s aerospace and defense affiliate said during an earnings call on Monday that it can chip in 1 trillion won in the group‘s deal to buy DSME thanks to brisk defense exports of Hanwha Defense that will be placed under it later.

On Sept. 26, Hanwha Group signed a preliminary agreement to acquire a 49.3 percent stake and managerial control of DSME from state-run Korea Development Bank (KDB) at 2 trillion won.

Hanwha Aerospace said its DSME due diligence will take place for up to six weeks before a definitive agreement. The deal is expected to be closed within the first half of next year after regulatory and anti-trust clearances, according to Hanwha.

Hanwha affiliates will buy 2 trillion won worth new common shares to be issued by DSME ? Hanwha Aerospace (1 trillion won), Hanwha Systems (500 billion won), Hanwha Impact Partners (400 billion won), and three Hanwha Energy subsidiaries (100 billion won) ? to take over the controlling stake.

Hanwha Aerospace will absorb its wholly-owned subsidiary Hanwha Defense remains as planned under the group-wide business restructuring effots, it said. It will also take over the defense division to be spun off from Hanwha Corp. Instead, Hanwha Aerospace will sell its subsidiary Hanwha Precision Machinery to Hanwha Corp., and Hanwha Power Systems to Hanwha Impact.

Hanwha Aerospace said the divestiture of Hanwha Power Systems was completed at the end of August, and Hanwha Defense is due to be merged as of Nov. 1, with the acquisition of Hanwha Corp.’s defense unit planned for end-November and the sale of Hanwha Precision Machinery for January of next year.

Hanwha Aerospace will also continue its efforts to sell Hanwha Techwin in better conditions.