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Hanwha Solutions to sell stake in Chinese PVC business Estimated proceeds of $500 mil will be used to help fund existing and future investments

Translated by Ryu Ho-joung 공개 2021-10-13 08:24:10

이 기사는 2021년 10월 13일 08:07 더벨 유료페이지에 표출된 기사입니다.

Hanwha Solutions plans to raise money by selling a significant minority stake in its Chinese polyvinyl chloride business as the South Korean company is increasingly in need of cash to fund existing and future investments.

Hanwha Solutions, part of the country’s seventh largest conglomerate Hanwha Group, will sell a 49% stake in its wholly owned Chinese PVC subsidiary, Hanwha Chemical Ningbo Co Ltd, to an external investor, industry sources said earlier Friday. The deal size is estimated to be 600 billion won ($500.2 million).

The decision comes as part of efforts by the company to boost its cash reserves as it made a series of acquisitions and equity investments earlier this year.

Hanwha Solutions poured a total of approximately 588 billion won into its wholly owned subsidiary Hanwha Global Asset Corporation through three rounds of capital injection announced in February, April and July respectively.

In June, Hanwha Solutions along with Hanwha Energy acquired a 24.1% stake in Hanwha General Chemical, formerly Samsung General Chemical, held by Samsung’s affiliates in a 1 trillion won deal. The acquisition was part of the landmark deal between the two South Korean conglomerates in 2015. About 473 billion won of the acquisition cost will be funded by Hanwha Solutions.

Hanwha Solutions also announced its takeover of French renewable developer RES Mediterranee in August in a deal worth 727.4 million euros or just over 1 trillion won, the biggest in the company’s history. The transaction is expected to close in early or mid-November.

In an effort to raise cash, Hanwha Solutions completed a 1.35 trillion won rights issue in March and also sold the Gwanggyo branch of Hanwha Galleria, its department store subsidiary.

The company has worked to improve its financial position at the same time, with its net debt declining to 3.18 trillion won at the end of June this year, down by about 1.5 trillion won from six months earlier. Its debt to asset ratio also dropped from 39.9% to 33.6% in the same period.

However, concerns about Hanwha Solutions’ credit risk are growing as its investment spree is expected to continue. Credit rating agencies said the impact of the RES Mediterranee acquisition on the company’s credit profile is limited, but added that the company would be closely monitored because its debt levels are expected to increase in the future as it pours money into new renewables projects.

Hanwha Solutions said that it would expand investments in the renewable energy space at home and overseas as the company has turned to clean energy as its future growth driver. It will increase domestic investments in future solar technology such as perovskite solar cells. (Reporting by Gyoung-tae Kim)
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