The successful listing of Doosan Bobcat on the Korean bourse caps off the financial restructuring that Chairman Park Jeong-won’s has been pushing since his inauguration.
Bobcat’s initial public offering (IPO) is expected to have an effect of improving the group’s financial structure by an estimated 900 billion won, including an immediate inflow of 360 billion won. Circulating on the market is a 30 percent share of the shares going public, including stakes of financial investors, Doosan Infracore and Doosan Engines. Doosan Infracore has secure 367.3 billion in cash by listing its own shares to the bourse.
“Doosan Infracore got a financial inflow of 705 billion won from financial investors in August 2015 under the conditions of paying 6.9 percent of investments as an annual dividend, and the financial investor’s stake has been disposed of through the IPO, eliminating the financial burden on the higher dividend,” a Doosan Group official said.
Given an expected rise in the corporate value of Bobcat’s stakes and additional disposing of stakes, the IPO will likely have an effect of improving the group’s financial structure by 900 billion won, he said.
With the IPO of Bobcat, Doosan Group plans to cut down on borrowings. The group currently owes about 10 trillion in borrowings. Doosan Infracore, the weakest subsidiary of the group in financial soundness, has about 6 trillion in consol bonds and corporate bonds that are to mature next year. Out of the total, $350 million or about 390 billion won in bonds issued overseas, which are to mature on Dec. 23, will be refunded under a deal.
Out of the remaining 530 billion won, Doosan Group expects 220 billion won in private placements to be refunded.
There is no problem in servicing the remaining borrowings due to Doosan Infracore’s cash funds worth 600 billion won and an inflow of money stemming from the listing of Bobcat, the group official said.
Doosan Group has strived to diversify borrowing channels since a raise in interests slated for next year could be coupled with the sagging economy and declining assent values and liquidity crisis, finding itself it not easy to issue bonds or borrow money from commercial banks, he said.
Doosan Group Undergoes Massive Restrucutring
Doosan Corp., which underwent significant restructuring over the past two years, saw operating income turn around 300 billion won.
Doosan Corp., the holding company of Doosan Group, said in an electronic filing that the company posted 306.3 billion won in operating income in the second quarter of the year, a 63.9 percent jump over the same period of last year. Doosan Corp. returned to a range of 300 billion won in operating income in the four quarters following the second quarter of 2015, when the company logged 308 billion in operating income. The company saw its net income surge 762.8 percent to 181.2 billion won.
If Doosan DST and Doosan Infracore, which belonged to Doosan Group last year but was disposed of this year, are accounted for, Doosan Corp. saw its operating income surge 33.2 percent.
Business analysts said Doosan Corp. will likely be firing on all cylinders after turning its operations around following a massive restructuring process.
Doosan Group Chairman Park Jeong-won, who took office in March following in the footsteps of former Chairman Park Yongmaan, has now removed internal barriers and has much room to maneuver on his own. Looking at Doosan Group’s 2nd quarter business performance, it implemented a strategy whereby it chooses which core businesses to retain and non-essential ones to dispose of Despite the decline in quantitative growth, the overall plan may have worked.
Doosan saw its assets decline by 4.251 trillion won or 7.6 percent by disposing of such businesses as its machine tools, national defense and heat recovery steam generator businesses. Doosan lost its weight, but saw the ratio of operating income surge from 4.1 percent to 7.2 percent.
In particular, Doosan Infracore, which underwent a massive restructuring, saw the ratio of operating income redouble from 4.7 percent to 10.7 percent in one year.
The company’s restructuring began to pay off. Thanks to the restructuring of Doosan Infracore’s headquarters and Chinese operation, coupled with Doosan Bobcat’s outward growth, the company saw the ratio of operating income swell by 127 percent, a Doosan Infracore official said. The company chalked up 226.8 billion won in operating income by cutting down on personnel expenses, fixed costs and purchase prices.
