The encyclopedia · Finance & Accounting · Financial decision · 2017–2022
Doosan Heavy borrowed against nuclear power — then South Korea phased it out
The heavy-engineering arm faced a liquidity crisis after South Korea phased out nuclear power. State banks injected ₩3.6T and the group sold assets.
Doosan Heavy Industries & Construction · Doosan Group · 2020-03
What happened
Doosan Heavy Industries & Construction was the flagship heavy-industry arm of Doosan Group and a global builder of coal and nuclear power plants. Years of aggressive expansion had loaded the conglomerate with debt, much of it tied to capital-intensive energy infrastructure.
In 2017 the South Korean government announced a policy to phase out nuclear power and move away from coal. Doosan Heavy's core order pipeline collapsed almost immediately. By early 2020 the company was unable to meet its debt obligations and asked its main creditors, Korea Development Bank and Export-Import Bank of Korea, for emergency support.
Between March and June 2020 the state banks provided ₩3.6 trillion in emergency loans. Doosan Group pledged to raise ₩3 trillion through asset sales, including its Seoul headquarters Doosan Tower, Doosan Solus, Doosan Infracore shares and the Club Mow golf course. The 23-month restructuring ended in early 2022 with a renamed company, Doosan Enerbility, and a portfolio pivot toward hydrogen, gas turbines and small modular reactors.
Why it happened
- Debt-funded expansion concentrated the group's balance sheet in coal and nuclear power plants just as the national energy policy turned against both
- Doosan Heavy's revenue model depended on large, long-cycle orders that could not be replaced quickly when the policy shift froze the domestic market
- The conglomerate had not built enough liquidity or diversification to absorb a structural decline in its largest business line
- The rescue came from state banks, meaning the failure became a creditor problem rather than a private restructuring
The lesson
A capital structure built for one energy policy becomes a liquidity crisis the moment policy changes. Long-cycle infrastructure businesses need balance sheets that survive political cycles.
Aftermath
Doosan Heavy completed restructuring in March 2022 and rebranded as Doosan Enerbility. The company pivoted toward hydrogen, gas turbines and small modular reactors. The episode became a case study in South Korea's reliance on state-led restructuring for strategically important but financially distressed conglomerates.
Sources
- The Korea Herald: Doosan Group to repay debt by selling new shares of Doosan Heavy (4 September 2020)
- Korea JoongAng Daily: Doosan Heavy ends debt restructuring with a new name (1 March 2022)
- KED Global: Doosan Infracore issues $300 mn dollar bonds amid corporate restructuring (15 July 2020)
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