Hanjin Heavy deal is nearing completion Dongbu consortium secures necessary funds to finance $348 mil takeover

Translated by Ryu Ho-joung 공개 2021-08-02 07:55:50

이 기사는 2021년 08월 02일 07:52 더벨 유료페이지에 표출된 기사입니다.

A consortium led by construction firm Dongbu Corporation has secured necessary funds to finance its acquisition of Hanjin Heavy Industries & Construction, with a target to complete the transaction in August.

The consortium recently selected Shinhan Investment to arrange debt financing for the acquisition, industry sources said on Thursday. The brokerage firm will provide a slightly more than 100 billion won ($87 million).

The consortium will pay about 400 billion won for Hanjin Heavy Industries & Construction, according to a source close to the deal. The debt financing secured from Shinhan Investment is about a quarter of the acquisition price.

The remainder will be funded by members of the consortium. Dongbu will invest about 100 billion in the company. It had cash and cash equivalents of 79.5 billion won and other liquid assets of 47.4 billion won at the end of March on a consolidated basis.

Echo Prime PE raised a 100 billion won fund from Korea Real Estate Investment & Trust (KOREIT) to invest in Hanjin Heavy Industries & Construction. KOREIT’s cash and cash equivalents were 334.2 billion won at the end of March.

Echo Prime PE is the largest shareholder of Dongbu. When the Seoul-based private equity firm acquired Dongbu in 2016, KOREIT also participated in the takeover as a limited partner.

Additionally, NH Investment & Securities’ private equity unit and Opus Private Equity will each invest 50 billion won.

The consortium has completed due diligence. The deal also received regulatory approval from the Korea Fair Trade Commission and is expected to be closed in August.

Once the acquisition is completed, the consortium will likely focus on improving the company’s financial performance. Hanjin Heavy Industries & Construction recorded revenue of 274.5 billion won in the first quarter, down 18.1% year-on-year. It also swung to an operating loss of 25.1 billion won in the same period.

The consortium is also looking for industry experts to help turn around the company. There are chances that Yu Sang-cheol, chief executive of Echo Prime PE, will join the company’s management as he did for Dongbu, industry watchers said. (Reporting by Gyoung-tae Kim)
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