[Exclusive] 'First-Generation Busan Shipbuilder' Dae Sun Shipbuilding & Engineering Seeks New Owner...Fresh Start in Dadaepo

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[Financial News] Dae Sun Shipbuilding & Engineering, which began in 1945 as "Dae Sun Iron Works" and has built an 80-year history as a leading local shipbuilder in Busan Metropolitan City, is once again looking for a new owner. After selling the Yeongdo Shipyard site and clearing its debt to Korea Development Bank (KDB), the company is redrawing its business map by consolidating production at Dadaepo. Against this backdrop, a creditor group led by Export–Import Bank of Korea (Korea Eximbank) has formally launched the sale process. With the shipbuilding supercycle underway and tailwinds from the Korea–US shipbuilding cooperation project Make American Shipbuilding Great Again (MASGA), strategic investors (SIs) are paying close attention.
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\r\n\r\nAccording to the shipbuilding and investment banking (IB) industries on the 22nd, Dae Sun Shipbuilding & Engineering has appointed Ernst & Young Hanyoung as its sale manager and is proceeding with the transaction using a "stalking horse" structure, in which a conditional lead investor is selected first and then an open competitive bidding is held. Multiple investors are said to have submitted letters of intent (LOIs) to the sale manager.
Dae Sun Shipbuilding & Engineering has agreed to sell Yeongdo Shipyard to HANLA IMS, a Busan Metropolitan City–based specialist in marine equipment and ship repair, for 107.1 billion won. Once this is reflected, the company will escape complete capital impairment, but its debt ratio is still around 1,000%, making further financial restructuring unavoidable. Management believes it must resolve about 220 billion won in debt owed to Korea Eximbank.
By the end of the third to fourth quarter of 2025, Dae Sun Shipbuilding & Engineering is expected to sharply reduce its borrowings, which had reached 330 billion won, and, together with the impact of the Yeongdo Shipyard sale, move out of a state of complete capital impairment. Its debt ratio, which once soared to 13,470%, has already improved from that peak.
To improve its management, Dae Sun Shipbuilding & Engineering has chosen to overhaul its business model, shifting from building complete ships to specializing in shipbuilding equipment and blocks. It is leaving Yeongdo and consolidating its production base at Dadaepo Shipyard in Busan Metropolitan City, where it will focus on manufacturing ship blocks and deckhouses (crew accommodation units) for major shipbuilding companies. With a full-scale relaunch in Dadaepo scheduled for June, the company is accelerating the build-out of its production facilities.
Consolidating operations in Dadaepo delivers significant fixed-cost savings. Previously, running both Yeongdo and Dadaepo created overlapping staffing and duplicate management expenses. By integrating everything at a single site, the company has created a structure that allows it to focus squarely on improving profitability.
Order intake is already off to a solid start. HJ Shipbuilding & Construction has subcontracted Dae Sun Shipbuilding & Engineering to build the deckhouse blocks for eight 7,900 TEU eco-friendly container ships ordered by a European shipowner. Dae Sun has successfully delivered the deckhouse for the first vessel and completed the lighting-up ceremony, during which all electrical, piping, and other systems in the deckhouse are tested. The project is being highlighted as a model case of win–win cooperation among mid-sized shipbuilders in the Busan Metropolitan City region.
An industry official said, "Dae Sun Shipbuilding & Engineering is applying the manpower and equipment know-how it built up during its era of complete ship construction directly to block and equipment production," adding, "Major shipbuilding companies have order backlogs exceeding three and a half years, so demand for subcontracted work should remain steady."
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\r\n\r\nThis is not Dae Sun Shipbuilding & Engineering's first restructuring. In the wake of the 2010 global financial crisis, the company entered a voluntary agreement with its creditors, and several sale attempts were made, only to fall through each time. A fresh start seemed possible in April 2021, when a consortium of five Busan Metropolitan City–based companies—Dongil Steel (now DONGIL STEELUX), Dongwon Housing, SEUN Steel, Dongil Suite, and others—led by Hwain Group Chairman Jang In-hwa moved to acquire the shipbuilder.
By the end of 2021, shortly after the Dongil Steel–led consortium took over, the company briefly emerged from complete capital impairment. However, a spike in raw material prices, chronic labor shortages, and a so-called heavy-tail payment structure—under which 60–80% of the ship price is paid upon delivery—triggered repeated liquidity crises. Operating losses widened from 14.3 billion won in 2020 to an even larger deficit the following year, and in October 2023 the company ultimately applied for a corporate workout with its main creditor, Korea Eximbank.
DONGIL STEELUX currently holds a 45.1% stake in Dae Sun Shipbuilding & Engineering and is its largest shareholder, but since the start of the corporate workout, effective control has shifted to the creditor group. DONGIL STEELUX has also suffered, facing the risk of being designated as an issue-listed company at one point due to equity-method losses from its stake in Dae Sun.
Market conditions are more favorable than ever. The domestic big three—HD Korea Shipbuilding & Offshore Engineering (HDKSOE), Hanwha Ocean, and Samsung Heavy Industries—are projected to post a combined operating profit of more than 6 trillion won in 2025, setting a new record, and their order backlogs already exceed three and a half years. With the docks of major players fully booked, there is a clear trickle-down effect as block and equipment subcontracting work flows to small and mid-sized shipbuilders. On top of this, the Korea–US shipbuilding cooperation project MASGA has gone into full swing, reigniting market interest in small and mid-sized yards. The United States is expected to order more than 400 new vessels—including merchant ships, Liquefied Natural Gas Carrier (LNG carrier) vessels, and special-purpose naval ships—by 2037, and Korean small and mid-sized shipbuilders are likely to benefit indirectly.
\r\nAn IB industry source commented, "Just as sales of mid-sized shipbuilders like K Shipbuilding and Daehan Shipbuilding drew strong interest from the market, Dae Sun Shipbuilding & Engineering could also be viewed as a differentiated asset once its Dadaepo base is fully stabilized." The source added, "Its positioning as a shipyard specializing in blocks and equipment, rather than complete ships, means relatively less need for additional capital injections after acquisition, which is a structure SIs tend to favor."
\r\nThere are still significant hurdles ahead. A debt ratio in the 1,000% range is burdensome even when accounting for the industry’s structural feature that advance payments are booked as liabilities. For potential buyers, operating the company without additional capital injections will be difficult, so the valuation and purchase price are expected to become the key sticking points.
\r\nSecuring sufficient Refund Guarantee (RG) limits is another critical factor. Mid-sized shipbuilders face structural constraints in expanding orders because their RG limits are far smaller than those of major players. One strategic reason Dae Sun Shipbuilding & Engineering shifted to specializing in blocks and equipment was to build a business model capable of generating revenue without relying on RG.
Chronic labor shortages are another variable. The lack of skilled workers across the shipbuilding industry is no exception for Dae Sun Shipbuilding & Engineering. Once operations in Dadaepo move into full swing, securing workers for key processes such as welding and painting is expected to become an urgent challenge.
A shipbuilding industry insider observed, "Dae Sun Shipbuilding & Engineering has the asset of 80 years of history and on-site experience in both Yeongdo and Dadaepo," and predicted, "Whether it can exit the corporate workout and welcome a new owner will likely be decided in the second half of this year."
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ggg@fnnews.com Kang Gu-gwi Reporter