이 기사는 2021년 08월 03일 08:03 thebell 에 표출된 기사입니다.

LG Chem has sold Ugimag Korea, for a mere 1 million won ($869.4) less than three years after its acquisition of the auto parts company.

The Seoul-based chemical company offloaded its entire stake in Ugimag Korea to small-sized auto parts provider Autronic for 1 million won on Friday, according to a regulatory filing.

The deal came after LG Chem’s 5 billion won equity injection into Ugimag Korea about two weeks ago, apparently part of an agreement with Autronic. Ugimag Korea has been a headache for LG Chem, which made a failed attempt to sell its stake in the company last year.

LG Chem’s decision to offload the business – even with an additional capital injection – shows how skeptical it was about Ugimag Korea’s chances of recovery, industry watchers said. The company was also considered a non-core asset of LG Chem, which has focused on the secondary battery business for its future growth.

LG Chem acquired 100% of Ugimag Korea for 23 billion won in September 2018 to enhance its automotive materials business. Ugimag Korea manufactures ferrite magnets used in automobiles and industrial equipment, and counts Germany's Bosch and Japan’s Mitsubishi as its customers. The acquisition price represented more than 30 times the company’s earnings before interest, taxes, depreciation and amortization.

However, Ugimag Korea swung to a net loss of 3.9 billion won in 2018. Its net loss nearly doubled to 7.1 billion won in 2019 and continued to widen to 7.9 billion won in 2020. Revenue also declined from 21.1 billion won in 2019 to 17.6 billion won in 2020, partly due to the impact of the Covid-19 pandemic.

LG Chem has made additional equity contributions totaling 34 billion won to Ugimag Korea over the past three years, including the latest 5 billion won equity injection.

Nexia Samduk, Ugimag Korea’s auditor, expressed concerns about the company’s ability to operate as a going concern for two consecutive years. The accounting firm said in the company’s 2020 audited financial statement that it was concerned about the impact of intensifying competition and rising costs on the company’s deteriorating earnings and cash flow. (Reporting by Euna Jo)