HANJIN HEAVY INDUSTRIES

- The acquisition process led by the Dongbu consortium completed, Hong Moon-Ki named the company’s new CEO
- Business normalization accelerated with uncertainties removed, great expectation on the synergy with Dongbu Engineering & Construction (E&C)

With the acquisition of Hanjin Heavy Industries & Construction (HHIC) by the Dongbu-led consortium successfully completed, HHIC makes a brand-new start. At the same time, there are great expectations of early business normalization, penetration into new businesses and synergy with Dongbu E&C. 

In late August, the Dongbu consortium closed the business acquisition with creditors and became the largest shareholder by acquiring 66.85% stake in HHIC. On September 3, HHIC held an extraordinary shareholders’ meeting and named Mr. Hong Moon-Ki, president of Dongbu Engineering, as its new CEO. The CEO (Yoo Sang-Chul) and vice president (Sung Gyeong-Chul) of ECHO PRIME PE were appointed as inside directors.

Mr. Hong was born in 1962 and graduated from Gangneung High School. He earned a bachelor’s degree in civil engineering at Seoul National University and started his career with Hyundai E&C. He worked for Dongbu E&C as the head of Civil Engineering Division and for Dongbu Engineering as the CEO. He is reputed as a professional engineer and CEO with great leadership. 
 
With the acquisition process successfully completed, there has been a rising expectation for business normalization. The consortium is also committed to provide a great support for the normalization of HHIC. Therefore, it is anticipated that its financial structure could be improved through aggressive investments.

In a shipbuilding sector in which the company is eager to expand sales, in particular, it is about to reenter into the merchant vessel market with the prosperity of special purpose vessels (SPVs). With the removal of uncertainties after stock selling, it appears that there would be good news from the deals currently in negotiations. 

HHIC is the nation’s defense industry leader with 100% design and shipbuilding capabilities. The global shipbuilder has maintained great reputation in landing vessels, transport ships and high-speed boats such as ROKS Dokdo and ROKS Marado, maintaining its No.1 position in the number of warships built. Last month, it signed an MOU for mutual cooperation with Daewoo Shipbuilding & Marine Engineering (DSME) to win a bid for the design of a Korean light aircraft carrier (CVX). 

The multinational shipbuilding company is also highly competitive in SPVs. HHIC is the shipbuilder which won a bid for the construction of the high-tech & high-value added ship ‘diving support vessel (DSV)’ in offshore service vessels (OSVs) for the first time in the Republic of Korea in 2007. In 2009, the company successfully constructed the ARAON, the first Korean-made icebreaking research vessel designed to explore and research the pole. 

In 2017, HHIC surprised the world by signing a contract for the construction of LNG bunkering vessels. With its unrivaled technology, early this year, the South Korean shipbuilder successfully won a bid to build high-tech 3D/4D geophysical research vessels for Korea Institute of Geoscience and Mineral Resources (KIGAM). 

To strengthen its mid- & long-term competitiveness in shipbuilding, the company plans to receive orders for merchant vessels such as mid-sized container ships, small & mid-sized LNG & LPG ships, product oil & chemical tankers and crude-oil carriers and develop markets by reinforcing sales forces and business portfolios. 

In construction, HHIC has strengthened its position by delivering nearly KRW 1 trillion orders so far this year. Traditionally, the company has shown its excellence in public constructions, focusing on infrastructure including airports, ports and roads. In particular, the South Korean construction company ranked 2nd in the amount of orders for public construction during the first half of this year. Considering such professionalism, it is anticipated that the company would further enhance the synergy with Dongbu E&C. 

The industry report predicts that HHIC would take a big step forward in both shipbuilding and construction. Dongbu E&C and other related parties also believe that HHIC’s extensive knowhow and advanced technology would be a big help for business diversification and penetration into new businesses such as eco-friendly energy and offshore plants. 

Dongbu E&C has asserted with confidence that it would normalize HHIC’s business earlier than expected based on its outstanding crisis management capabilities and management knowhow. HHIC is also committed to get its damaged reputation back through the improvement of financial structure such as increase in sales and profitability. 

The CEO Hong Moon-Ki emphasized, “It is time to get ready for innovative changes.” He continued, “We are determined to make our best efforts to grow into a sustainable enterprise with core competitiveness as a shipbuilding forerunner and construction pioneer in the Republic of Korea.”