The directorate of Daewoo Shipbuilding and Marine Designing got the way for the recapitalization free from the monetarily disturbed shipbuilder to continue. They officially approved the proposed changes to the company, which included naming the shipyard Hanwha Shipyard and adding new board members and management. The shareholders will meet toward the end of May to approve the board's recommendations, which will be the final step in a lengthy process.
Hanwha Group will provide the shipyard with nearly $1.4 billion in capital as part of the recapitalization arranged by Korea Development Bank. In return, Hanwha Group will acquire a 49.3 percent ownership stake in the shipyard in the form of over 100 million newly issued shares that will be held by five of Hanwha's divisions. During the government-led bailout that began in 1999 and ended in 2001, KDB had become the company's largest investor. Now, its stake will be reduced to just over 28%. Officials at the bank stated last year that the time had come for the shipyard to be returned to private investors, who would be able to support investments in new technologies and finance the modernization of the operations necessary to maintain the shipyard's competitiveness.
Hanwha takes over management of the shipyard group as part of the agreement. Kim Dong-kwan, the son of Hanwha chairman Kim Seung-youn, will officially take on the role of Group Vice Chairman and become a non-executive director, formalizing his involvement in the DSME takeover and future leadership. George P. Hedge, nephew of previous U.S. President George W. Hedge and an accomplice in the law office Michael Best and Friedrich, was likewise selected as a free chief. Kwon Hyek-woong, a longtime Hanwha executive who previously worked for Hanwha TotalEnergies Petrochemical Co. and Hanwha's Support Division, has been proposed for the shipyard's CEO and board position.
Hanwha acknowledged on April 27 the conditions spread out by Korea's Fair Exchange Bonus which set limitations to guarantee rivalry would be kept up with in the protection areas. Hanwha, a prominent defense contractor and system supplier, was feared to have an unfair advantage and might attempt to exclude competitors from future naval shipbuilding. Hanwha stated that it believed it was urgent to move forward with the transaction, citing the deteriorating position of DSME.
The shipyard was obtained in 1978 by Daewoo and sent off as Daewoo Shipbuilding and Large equipment. After twenty years during the Asian monetary emergency, KDB stepped in to save the organization from breakdown, and as a component of the understanding it was veered off from Daewoo into a free organization. The government had been looking into ways to privatize the company for a long time. One option was a merger with Hyundai Heavy Industries, which the European Union opposed because it would have reduced competition for gas carrier construction. In September 2022, KDB identified Hanwha as the preferred buyer.
The proposal was accepted by the board, which then presented its recommendations to the shareholders. The final meeting is scheduled for May 23. At that meeting, shareholders will be asked to approve the company's rebranding as Hanwha Ocean, new directors, rights offering, and management change.
The agreement comes at a time when Korean businesses are coming under increasing pressure and the shipbuilding industry continues to report significant declines in new orders. According to Clarkson's most recent market report, April orders were down 62% compared to a year ago and 44% compared to March 2023. In comparison to China, which received 76% of the orders placed in April based on CGT, South Korea, which had been leading the market or close competitors to the Chinese shipyards, fell behind in April, receiving only 20% of the orders (based on compensated gross tons).
Clarkson said that China has overtaken 70% of the global shipbuilding market for the first time in more than five years. They reported a slight decrease in the global orderbook backlog as a whole. South Korea, on the other hand, has 35% of the backlog, while China now has 45%.
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