Daewoo Heavy workers to sign bid pact with investment partner (2004-9-8)

Employees of Daewoo Heavy Industries & Machinery Ltd. expect to sign an agreement this week to bid for a stake in the company with an investor group led by the owner of the nation\’s No. 3 mobile-phone carrier, labor representatives said.

Two worker groups expect to sign a memorandum of understanding within this week with a group formed by Park Byeong-yeop, vice chairman and the largest shareholder of Pantech & Curitel Communication Co., they said.

"Although we cannot say the exact date, the signing will be within this week. With the partners, we will submit a letter of the intent by Sept. 14 to buy (a stake in) our company," said Kim Youn-hwan, leader of the employee group.

The Daewoo workers are seeking to buy part of the company in an effort to preserve their jobs. The employees said they decided to join Park\’s group – one of several bidders for a big Daewoo Heavy stake – because the entrepreneur has demonstrated a respect for job security in his mobile-phone business.

The employee groups consist of a labor union and an office workers\’ organization. They plan to raise about 160 billion won among the workers and other investors to fund the joint purchase, the representatives said. The workers hope to acquire a 10 to 15 percent stake in the company and establish a committee with management to discuss job-related issues, they said, adding that about 81 percent of the Daewoo workers have approved the plan.

Daewoo Heavy is the nation\’s largest maker of construction equipment. The government acquired about 50 percent of the company after its parent, Daewoo Group, collapsed in 1999 under a mountain of debts. The government is now selling that stake.

The sale has generated considerable interest from investors as strong exports to China and a robust local base have made Daewoo Heavy one of the most successful businesses in the industry.

The government and its Korea Asset Management Corp., which holds the largest part of the government\’s shares, plan to select a preferred bidder to acquire the company in October. Other bidders known to be competing include the Hyosung and Doosan Korean conglomerates, and the U.S. equity fund, Carlyle Group.

Park Byeong-yeop individually formed a consortium with local investors to join the bidding. His company, Pantech, acquired the mobile-phone arm of Hyundai Group in 2001, and did not lay off any employees after the takeover.

To help facilitate the sale, the government initially planned to split Daewoo Heavy into defense and non-defense divisions. But the idea triggered strong protests from many Daewoo workers who feared the breakup would cause huge job losses. Defense contracts comprised just 13 percent of Daewoo Heavy\’s sales in 2003.

Industry watchers estimate more than 830 billion won will be needed to buy the about 50 percent of the company\’s outstanding shares that the government holds. The other 50 percent of shares were acquired by private creditors and are not currently being sold.