Doosan Infracore Co. shares surged Tuesday after its parent agreed to shoulder all of its litigation risks, brightening the prospect of its impending sale and potentially lifting the value of the deal.

Doosan Group and its sales advisor Credit Suisse postponed the tender date for the construction equipment maker to Sept. 28 from Sept. 22, following the group’s decision to assume all contingent liabilities related to Doosan Infracore China Co. (DICC), according to investment bank sources on Monday.

Doosan Infracore shares jumped 13.8 percent to close Tuesday at 9,260 won ($7.95).

Doosan Group recently announced it would shoulder all contingent liabilities associated with the DICC lawsuit, which had been the biggest impediment to the sale of Doosan Infracore.

Doosan Infracore is currently locked in a legal battle with a group of local investors, including Mirae Asset Private Equity, IMM Private Equity and Hana Financial Investment Co., that could cost the company more than 700 billion won in compensation.

In 2011, the consortium paid 380 billion won to buy a 20 percent stake in DICC from Doosan Infracore on expectations that it would take the Chinese unit public. But the initial public offering plan fell through due to DICC’s poor performance, and the investors filed a lawsuit against Doosan Infracore in 2015, citing breach of agreement and demanding a reimbursement of principal and 15 percent interest on their investment.

Doosan Infracore lost in the lower courts and is now awaiting final ruling in Korea’s Supreme Court.

The removal of a major risk factor can turn the game around for the Doosan Infracore deal.

“Doosan Group’s decision to fully take on the contingent liabilities of the lawsuit not only confirms its commitment to the sale of Doosan Infracore but the group’s own resolution to see through its self-rescue plans,” said one IB source. “This is likely to draw more interest from both financial and strategic investors that have been on the lookout for attractive buyouts.”

The latest turn of events is likely to drive up the price tag of Doosan Infracore. The deal, which had previously been priced at around 700 billion won, could now fetch 1 trillion won or more, according to experts.

Potential buyers include MBK Partners, Glenwood Private Equity, Hahn & Company and other top-tier private equity firms. Three to four strategic investors have also reportedly expressed interest but are bound by confidentiality agreements.

Up for sale is the 36.27 percent stake in Doosan Infracore owned by Doosan Heavy Industries & Construction Co. Doosan Infracore’s 51.05 percent stake in Doosan Bobcat, the U.S.-based construction equipment maker, has been excluded from the deal.

Under the plan, Doosan Infracore will be demerged into business and investment operations, with the investment unit to merge with Doosan Heavy and the business arm to be sold off.

Doosan Group has vowed to secure 3 trillion won through asset sales after receiving a 3.6-trillion-won state bailout to rescue Doosan Heavy.

By Kang Doo-soon, Park Jae-young and Kim Hyo-jin

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