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South Korea to get $3 billion offer for Daewoo E&C

A US consortium wants to buy South Korean builder Daewoo Engineering & Construction Co for about $3 billion, a local newspaper reported, sending Daewoo's shares up as much as 8%.

US investor-led TR America Consortium, picked as one of preferred bidders to buy Daewoo E&C in a failed auction in November, plans to make a fresh offer to buy 50% plus one share in Daewoo for 3.39 trillion won ($2.96 billion), the Chosun Ilbo quoted a source at the investment group as saying.

An official from state-run Korea Development Bank, which is lead creditor to cash-starved Kumho Asiana Group, parent group of Daewoo E&C, said the bank had not received a bid from TR America.

“We've received no bid interest from TR America yet,” a KDB official in charge of Kumho Group restructuring said. KDB is set to acquire Daewoo under a debt restructuring agreement with Kumho Asiana.

“We have no objection to a sale (to foreign investors) but it has to be done quickly to restructure Kumho group, which urgently needs cash for operation. And the problem with TR America is that at the moment we don't know how long it will take to complete a deal.”

Shares in Daewoo E&C jumped as much as 8% on Tuesday after the report of TR America's plan for a 20,000 won a share offer, nearly double Daewoo's Tuesday afternoon trading price at 11,250 won. The broader market was up slightly in early afternoon trade.

An attempt to sell Daewoo E&C, the country's No. 4 builder by market value, has made little progress and faltered late last year as key units of its parent Kumho Asiana Group were put under creditors-led restructuring scheme, one of the country's highest-profile corporate restructurings since the 1997-98 financial crisis.

Kumho Asiana, South Korea's 9th-largest conglomerate, had embarked on a debt-fueled acquisition spree over the past years, Including the 6.4 trillion won Daewoo deal.

It bought Daewoo, now worth only 3.5 trillion won, at a loss in 2006 by agreeing to buy back 39% of the company later from financial investors far above the current market prices.

The Chosun Ilbo newspaper said representatives of TR America would visit Seoul this week to make an offer and financial investors were likely to prefer a deal with the US group to the planned purchase by KDB, which is offering 18,000 won a share.

TR America was not immediately available for comment. (Reuters)