S.Korea KDB wants Daewoo Eng sale in auction -paper

SEOUL, June 30 (Reuters) - Korea Development Bank (KDB), the main creditor for the parent of Daewoo Engineering (047040.KS), wants a majority stake in the builder to be put up for sale in an auction, a newspaper reported on Tuesday, citing the bank's CEO.

The Chosun Ilbo quoted KDB Chief Executive Min Euoo-sung as saying that creditor banks wanted Kumho Asiana Group, which controls 72 percent of Daewoo Engineering & Construction together with financial investors, to offer 50 percent plus one share in the firm to markets.

"Selling Daewoo Engineering & Construction to markets will come ahead of a plan that KDB buys it through a private equity fund (PEF)," Min told the daily.

"Sale to a PEF cannot fetch a high price. If the sale goes through at a good price in markets, Kumho Asiana will be able to narrow losses from the sale and this in turn will benefit creditors."

A KDB spokesman said the bank could not immediately confirm the report.

Lee Jae-won, Kumho Asiana Group spokesman, said the schedule and details of the Daewoo Engineering sale plan would depend on market circumstances, and the group had yet to pick an adviser for the forthcoming deal.

Shares in Daewoo Engineering, the country's No. 3 builder, soared by its daily ceiling of 15 percent on Monday after its cash-strapped controlling shareholder, Kumho Asiana Group, said it aimed to sell its stake. [ID:nSP482036]

Kumho said on Sunday it might consider various ways to unload Daewoo, such as the sale of a 39 percent stake held by financial investors including management rights, the sale of a 50 percent stake plus one share, and the sale of a 72 percent stake owned by the group and financial investors.

Daewoo shares were trading 5.45 percent lower at 13,000 won by 0102 GMT as expectations for its sale seemed to have been priced in, underperforming the wider market's .KS11 1.38 percent gain.

(Reporting by Kim Yeon-hee and Shin Jieun; Editing by Ken Wills)