이 기사는 2021년 11월 26일 08:19 thebell 에 표출된 기사입니다.

Hanwha Solutions’ sale of a stake in its advanced material business is taking longer than expected as it hasn’t decided a deal structure yet.

Hanwha Solutions, part of South Korea's conglomerate Hanwha Group, had been in talks with private equity (PE) firms interested in acquiring a stake in its advanced materials division, but it recently halted the process, mainly because the company hasn’t finalized the deal structure yet, according to industry sources on Tuesday.

“The liquidation of Hanwha Solutions’ advanced materials division is currently at a standstill,” said a source familiar with the deal. “The company is finalizing specific processes, including how much stake in which division will be put up for sale. The deal is not cancelled.”

Hanwha Solutions had been in talks with some PE firms as it planned in early October to carve out the advanced materials business and hand over a 100% stake in its Chinese polyvinyl chloride unit, Hanwha Chemical Ningbo, to the newly created entity.

A number of PE firms started conducting due diligence in mid-October. Market insiders had expected the final decision to be announced in the second week of November given the due diligence process normally takes four to five weeks.

Some market insiders are pessimistic about the deal because the advanced materials business is unlikely to turn to a profit. The division produces light composite and solar materials, with glass fiber mat reinforced thermoplastics (GMT), flexible copper clad laminate (FCCL) and EVA sheets among its key product lines.

“Among them, the mainstay automotive lightweight parts and materials are not widely adopted yet and the business is difficult to make a profit due to pressure from Hyundai Motor and Kia’s original equipment manufacturers to cut costs and competition with LX Hausys,” said an industry source. “Hanwha Solutions’ advanced materials business has been unprofitable for the last few years, and it will be more difficult for PE firms to make the business turn to a profit.”

Hanwha Solutions had sounded out market interest in its advanced materials business last year as part of efforts to improve its financial position.

The company reportedly plans to sell a 49% stake in the new entity and use the proceeds to repay existing debt and improve the company’s financial position. (Reporting by Ha-na Suh)