HD Hyundai Heavy Industries announced on June 26 that it will sell all tangible assets, including real estate and movable property of the Gunsan Shipyard factory, dormitory, and technical training center, to J-Ocean Heavy Industries, an affiliate of Korea Land Trust.

After signing a memorandum of agreement on the transfer of Gunsan Shipyard assets in March, both sides have continued negotiations on specific transaction conditions along with due diligence for three months.

The transaction amount, which had been mentioned as at least 700 billion won ($454.98 million) to a maximum of 1 trillion won ($649.98 million), was ultimately decided at 780 billion won (about $507.21 million). Both sides agreed at a level adding 17% to the book value (665 billion won). This is a disposal about 16 years after HD Hyundai Heavy Industries completed the construction by investing 1.2 trillion won ($780.74 million) in 2010.

Regarding this transaction, HD Hyundai Heavy Industries explained, “The purpose is to improve business efficiency through the sale of non-core assets.”

With this sale, Korea Land Trust has come to possess two shipyards under its umbrella, including HJ Heavy Industries based in Yeongdo, Busan, and J-Ocean Heavy Industries located in Gunsan.

The Gunsan Shipyard is a site that HD Hyundai Heavy Industries completed on a 1.8 million-square-meter scale in the Gunsan National Industrial Complex in Jeonbuk in March 2010. It is one of the largest facilities in the country, equipped with a 700-meter-long dock, a 1,650-ton goliath crane, and a 1.4-kilometer quay wall.

It was equipped with a production capacity to build 12 bulk carriers of the 180,000-ton class annually, but it had to completely suspend operations in 2017 as it faced an order cliff. Afterward, block production was resumed, but it failed to reach full normalization before coming into a new owner’s hands this time.

Source:Business Korea