January 21, 2009

Korean bank scraps shipyard deal

The state-run Korean Development Bank said it would reject a deal for Hanwha Group to buy 50.4 percent of Daewoo Shipping & Marine Engineering Co.

The board of directors reached a consensus that Hanwha's funding plan was not realistic and its proposal to buy a part of the stake was not acceptable, a bank official said, Yonhap News Agency reported Wednesday.

The bank said it would keep a $220 million Hanwha deposit, Yonhap said.

Hanwha signed preliminary papers on the deal in November. But, the deal did not close by a year-end deadline as Hanwha said it was having trouble raising the $4.56 billion it needed. The company offered to pay in installments.

The state lender urged Hanwha to come up with a plan for its acquisition last week, but then decided it was not willing to revise the original terms.

Hanwha group did not comment on the deal, saying it had not been formally informed of the bank's decision, Yonhap said.