KDB confirms Daewoo Ship sale collapse; to retry

SEOUL, Jan 22 (Reuters) - Korea Development Bank (KDB) confirmed on Thursday the collapse of a planned sale of Daewoo Shipbuilding (042660.KS) but said it would consider various ways to put the world's No. 3 shipmaker up for grabs again.

The state-owned bank said in a statement that talks to sell a 50.4 percent stake in Daewoo Shipbuilding & Marine Engineering to South Korea's Hanwha Group had broken down due to a dispute over financing terms.

Hanwha was picked in October as the buyer of the stake, estimated to fetch $5 billion and held by KDB and debt clearer Korea Asset Management Corp.

"New funding plans Hanwha submitted on Jan. 9 fell sharply short of the acquisition cost, and included a proposal to pay for part of the acquisition five years later," KDB said in a statement.

The bank added that Hanwha's proposal backtracked on their preliminary agreement, and would damage M&A principles of fairness and transparency if it was accepted.

Hanwha Group spokesman Ju Cheol-beom said the group was highly likely to take legal action to recover the initial deposit of 300 billion won ($218.9 million) it had put down to buy the shipyard.

The KDB statement said it would have Daewoo Shipbuilding restructure management and improve the competitiveness of its core business, as it planned to put the shipyard up for grabs later on depending on market conditions.

Analysts say it may take more time to find a new buyer given the shortage of candidates who could afford such a large asset amid the prolonged economic downturn.

Steelmaker POSCO (005490.KS), one of the previous bidders, said earlier this month that it did not plan to bid for the shipbuilder again.

Shares in Daewoo Shipbuilding shed 4.4 percent to close at 19,350 won, while Hanwha Corp (000880.KS), a core unit of the Hanwha Group, soared 11 percent to 28,550 won as investors were relieved of concerns about the possible impact of the acquisition on the group's finances.

($1=1370.8 Won)

(Reporting by Kim Yeon-hee; Additional reporting by Shin Jieun; Editing by Jonathan Hopfner)

((yeonhee.kim@thomsonreuters.com; +82 2 3704 5646; Reuters Messaging: yeonhee.kim.reuters.com@reuters.net)) Keywords: DAEWOO KDB/HANWHA

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