이 기사는 2020년 05월 01일 08:00 thebell 에 표출된 기사입니다.

South Korea’s private equity (PE) firm Hahn & Company’s third recapitalization worth 1.6 trillion won on its portfolio company Ssangyong Cement Industry is approaching the finish line. The sell-down process is likely to be completed next month.

Mirae Asset Daewoo acted as a lead arranger of the latest recapitalization while Woori Bank, Nonghyup Bank and Korea Investment & Securities acted as joint arrangers of the deal, sources familiar with the matter said on April 27.

The buyout firm increased the amount of its borrowing by approximately 300 billion won through the latest recapitalization compared to its second round of recapitalization where the firm secured 1.3 trillion won. The third capitalization consists of a 1.22 trillion won senior debt, a 280 billion won mezzanine debt and a 100 billion won revolving credit facility.

“The third recapitalization of Ssangyong Cement was around 120 percent overbooked,” said a source familiar with the matter. The source added the sell-down of the remaining amount is likely to be carried out at the end of May.

Market observers view it is meaningful in that the recapitalization has been successfully done despite lackluster investor sentiment due to the coronavirus outbreak. Shares of South Korea’s listed companies have swung wildly fueled by concerns over global economic crisis. Stocks of Ssangyong Cement also dropped to 3000 won in mid-March but regained ground later. Mirae Asset Daewoo also reportedly played a vital role in the deal as the lead arranger.

Most of all, the successful execution of the third recapitalization is attributable to Ssangyong Cement’s ability to generate stable cash flow, market observers said. The company recorded EBITDA of around 392.4 billion won and an operating profit of 228.4 billion won in 2019. The company has shown stable financial performance ever since Hahn & Co. acquired the company in 2016. Ssangyong Cement has a rating of A- with a positive outlook by all three domestic credit ratings agencies.

Hahn & Co. financed 780 billion won through acquisition financing when taking over Ssangyong Cement in April 2016. In January 2018, the buyout firm secured around 1.05 trillion won in the first recapitalization on the cement manufacturer. In February 2019, the buyout firm secured 1.3 trillion won in the second refinancing on the company. The interest rate for the third recapitalization is likely to be set at a four percent level.

(By reporter Kim Byung-yoon)