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Doosan E&C’s bad asset portfolio ValueGrowth sees cash flow improve About $18 million worth of preferred shares set to be redeemed in August

Translated by Ryu Ho-joung 공개 2021-07-23 07:27:41

이 기사는 2021년 07월 23일 07:22 더벨 유료페이지에 표출된 기사입니다.

ValueGrowth, Doosan Engineering & Construction (Doosan E&C)’s portfolio of bad assets, has seen its cash flow increase, a positive sign for its construction company.

ValueGrowth will redeem 36,550 preferred shares worth 20 billion won ($17.5 million) early next month, industry sources said on Wednesday.

The redemption comes a year after its establishement. ValueGrowth was split off from Doosan E&C, the building subsidiary of Doosan Heavy Industries & Construction, last year to hive off the construction business’s bad assets, such as stalled residential and commercial construction projects and land with restricted use.

Assets handed over to ValueGrowth included contract work account receivables of 188 billion won, other receivables of 6.8 billion won and short-term and long-term loans of 317.2 billion won, with nearly half of each amount set aside as loss reserves.

Shortly after the split-off, the company raised 80 billion won from Doosan Cuvex, the facility management subsidiary of Doosan Heavy Industries & Construction, through an issue of 160,000 redeemable preferred shares.

Doosan Cuvex funded the purchase from its shareholders Doosan Co, Doosan Infracore, Doosan Bobcat Korea and Hancomm. Apart from injecting cash into ValueGwoth through Doosan Cuvex, this restructuring was partly aimed at creating synergy between the two companies.

The shares mature four years from the issue date, with an 8.2% annual interest rate. Doosan Cuvex has the right to sell them back.

ValueGrowth decided to redeem part of these shares thanks to improved cash flow. Collection of part of its loans generated a cash inflow of about 4.9 billion won last year. The company’s cash flow has continued to improve this year.

“The redemption of part of preferred shares will help reduce financial costs and improve (ValueGrowth’s) financial position,” said an official at Doosan E&C.

After the redemption is completed, redeemable preferred shares held by Doosan Cuvex will be reduced to 123,450, worth about 67.6 billion won based on the price used in the redemption transaction. (Reporting by Youn-jae Lee)
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