Dongbu's construction unit seeks Chinese buyer

Midsized Korean builder Dongbu Corp. recently sent a letter explaining the sales process and qualities of the firm to attract potential Chinese investors, local reports said Tuesday. 

According to the reports, NH Investment & Securities, which manages the company’s sale, sent the letter written in English and Chinese to about 10 Chinese firms that are interested in expanding into Korea and Japan. 

If successful, Dongbu will mark the first large construction firm in Korea to be sold to a Chinese company. 

“We’ve sent the letter to strategic and financial investors in China after announcing the sale on Aug. 10. It’s difficult to reveal their names, but they’re companies that have either shown an interest or have attempted to expand into Korea,” a Dongbu official told media. 

The official added that they are “positive” that several Chinese firms will send the letter of intent due Tuesday, given Donbgu’s proven performance and history in Korea. 

The estimated price for the sale is about 210 billion won ($174.4 million). Dongbu currently holds 320 billion won in unsecured claim of which 110 billion won is planned to be paid this year. That leaves the buyer of Dongbu responsible for the remaining 210 billion won of unsecured claim.

At least six Korean construction companies, including Kukdong E&C and STX Construction, are available in the market, but Dongbu is the only one that is actively seeking a Chinese buyer. 

Industry insiders are of the view that China’s increased technology and broad market has prompted the unusual move by the local construction company.

“If acquisition from China is successful, we expect to create synergy in housing, civil engineering, real estate development and plants. We can also expect to enter Hong Kong and Macau,” the company official said.

By Suk Gee-hyun (monicasuk@heraldcorp.com)