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Daelim revokes 2.2-tln-won deal with Iranian oil company in wake of reinstated U.S. sanctions

All News 21:43 June 01, 2018

SEOUL, June 1 (Yonhap) -- Daelim Industrial Co., a major construction firm here, has canceled a construction deal worth 2.2 trillion won (US$2 billion) with an Iranian oil refining company in the wake of the United States' renewed sanctions against the Middle Eastern country, the South Korean firm said Friday.

Daelim disclosed the cancellation of the deal with Esfahan Oil Refining Company in a report to the financial watchdog Financial Supervisory Service.

The deal, signed in March last year, was designed to improve and expand the facilities of Iran's refinery in Isfahan, located around 400 kilometers south of Tehran.

The canceled deal was worth 2.2 trillion won, which accounts for nearly 24 percent of Daelim's annual sales as of 2015.

"(The deal) was canceled after fund-raising was not completed because of worsening external conditions, including economic sanctions on Iran," the South Korean company said. Fund-raising was a prerequisite for the deal to take force, according to Daelim.

Under the deal, Daelim had been in contact with financial companies at home and abroad to finance the construction project, but the financial firms reportedly decided not to finance it in the face of the recent U.S. sanctions on Iran, including economic sanctions.

Daelim said that the cancellation would have only limited impact on the company's business prospects.

U.S. sanctions against Iran are also expected to affect an Iran construction deal by Hyundai Engineering Co.

Hyundai Engineering finalized the deal, worth 3.8 trillion won with Ahdaf Investment Company in March, last year to construct a refining complex in Iran. It was reported to be the biggest construction deal that a South Korea company has clinched in the Middle Eastern country.

Hyundai Engineering is currently "in discussion with the Iranian side on whether to proceed with the business," the company said.


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