POSCO has decided to dismiss Daewoo International CEO Jeon Byeong-eal for openly disapproving of its plan to dispose of Daewoo’s stake in a Myanmar natural gas project, officials familiar with the matter said Wednesday.
The world’s fourth-largest steelmaker is expected to accept the resignation tendered by Jeon on May 14. Jeon and 31 other heads of POSCO affiliates turned in resignations to Chairman Kwon Oh-joon to show their willingness to transform their companies into more efficiently-managed and profitable entities.
“The Daewoo CEO, who has been in the post since March 2012, will soon be replaced,” said an official familiar with the matter, who declined to be named. “It is hard to officially say why POSCO decided to dismiss him. But what I can say is that POSCO is unhappy with how Jeon has behaved concerning the sale of the Myanmar natural gas stake.”
POSCO holds a 60.31 percent stake in Korea’s largest trading firm, which has successfully been producing natural gas in waters off Myanmar since June 2013.
The steelmaker has been considering the sale as part of its ongoing restructuring campaign to sell non-core units to raise much-needed cash.
Kwon has said all POSCO subsidiaries are subject to restructuring and some of them could be sold to third parties if necessary.
The steelmaker signed a deal to sell a 38 percent stake in POSCO Engineering and Construction, worth 400 billion won, to a Saudi sovereign fund on June 2.
Following a flurry of reports that POSCO would sell Daewoo’s stake in the natural gas business, Jeon posted a message on the company bulletin board, criticizing POSCO management for pushing ahead with the sale.
He even sent an email to POSCO Chairman Kwon, arguing that unloading its stake in the Myanmar natural gas and other resources-related projects would be a huge loss for POSCO.
“We don’t have much to say about Jeon’s dismissal. It is just regrettable,” a Daewoo International official said. “All Jeon did was to voice his opinion for the sake of the company. On the other hand, POSCO has to do what it has to do. That’s it.”
Daewoo posted 94.1 billion won in operating profit from its Myanmar natural gas project in the first quarter of this year, accounting for 88 percent of the firm’s 110.8 billion won operating profit.
That indicates the trading company will likely earn nearly a 400 billion won operating profit from producing natural gas in the Southeast Asian nation for 2015.
Given Daewoo’s heavy dependence on the Myanmar gas field, the sale means an end to its natural resources businesses.
Kwon told reporters, Tuesday, that POSCO has been considering selling the Myanmar gas ownership as a long term plan.
“We have never said that we will immediately dispose of Daewoo’s Myanmar gas business,” Kwon said after attending the 16th Steel Day ceremony at the company headquarters in southern Seoul.
“If things go really bad for POSCO, we will only then weigh selling the Myanmar stake. We just wanted to find out how much it is worth,” he said.
Meanwhile, POSCO dismissed Vice President Cho Chung-myong, who oversaw the restructuring of the firm’s affiliates, holding him accountable for the controversy leading to the dismissal of Daewoo CEO Jeon.
POSCO’s internal documents concerning the restructuring of its units were leaked to some media outlets last month, which first reported the steelmaker may sell Daewoo’s natural gas business.
Source: Korea Times