June 24, 2014 / 7:28 AM / 4 years ago

UPDATE 1-POSCO drops plan to buy Dongbu's steel, power units

* POSCO cites financial burden, price differences

* “No current plan” to sell Daewoo International stake -CEO

* POSCO plans to seek POSCO Energy listing this year

SEOUL, June 24 (Reuters) - South Korean steelmaker POSCO said on Tuesday that it will not buy two of the units of cash-strapped conglomerate Dongbu Group, citing financial burdens and differences over asset prices.

The move comes as the world’s sixth-biggest steelmaker grapples with debt and three consecutive years of declining profit, hit by the industry’s prolonged downturn.

Korea Development Bank (KDB), Dongbu Group’s main creditor, offered to sell Dongbu Incheon Steel and Dongbu Power Dangjin to POSCO in a package deal expected to be worth about 900 billion Korean won ($884.26 million), a source with direct knowledge of the matter told Reuters, declining to be identified as he was not authorized to speak to the media.

The KDB said on Tuesday it would now begin a separate bidding process for Dongbu Power Dangjin, which is viewed as a more attractive asset than the Dongbu Incheon Steel. The bank added it will discuss as to what to do with Dongbu Incheon Steel, which has drawn no interest so far.

Meanwhile POSCO Chairman and chief executive Kwon Oh-joon said on Tuesday POSCO has no “current plan” to sell any of its controlling stake in its trade and resources arm, Daewoo International, saying it is difficult to find a buyer for the stake, which it bought for $3.3 billion in 2010.

He said the steelmaker plans to list shares in three of its units on the domestic bourse - POSCO Specialty Steel, POSCO Engineering & Construction and POSCO Energy. In a first step POSCO is seeking to initially list POSCO Energy, a power plant unit, this year, he said. (Reporting by Hyunjoo Jin and Joyce Lee; Additional reporting by Seyoung Lee; Editing by Kenneth Maxwell)

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