이 기사는 2021년 09월 09일 08:08 thebell 에 표출된 기사입니다.

LX Hausys, formerly known as LG Hausys, has joined the race to acquire South Korea’s top furniture maker Hanssem.

LX Hausys has recently decided to participate in a special purpose company (SPC) set up by IMM Private Equity for the acquisition. The company will invest 300 billion won ($257 million) in the SPC as a limited partner.

LX Hausys is expected to fund the investment by using its cash reserves and a bond issuance. The company's cash reserves have sharply increased since last year. It had cash reserves of 289.9 billion won at the end of June, up from around 140 billion won between 2017 and 2019.

LX Hausys secured liquidity by selling off its site and a building in Ulsan for 63 billion won and support facilities and land in the Onsan industrial complex for 34.4 billion won last year. Its operating cash flow increased by more than 100 billion won to 463.9 billion won in 2020 from 344.8 billion won in 2019.

The company may also raise funds by issuing corporate bonds. LX Hausys’s corporate bond balance was 439.6 billion won at the end of June, of which 250 billion won will mature within a year.

The company plans to raise as much as 100 billion won through a bond issuance in mid-September while the amount may be increased to 200 billion won depending on the demand.

An official at LX Hausys said that its planned bond issuance is not directly related to its investment in the SPC to acquire Hanssem.

Improving financial performance of LX Hausys’ automotive and industrial film business is expected to back the company’s finances.

LX Hausys mainly focuses on the building and interior business and automotive and industrial film business, with the former accounting for 70% of its revenue. After the automotive and industrial film division swung to a loss in 2018, the division has been eroding the overall profit.

The automotive and industrial film division recorded a loss of 8.8 billion won in 2018, 21.8 billion won in 2019 and 45.3 billion won in 2020. During the same period, the building and interior division recorded a profit of 88.6 billion won, 90.8 billion won, and 116.2 billion won.

The company tried to sell its automotive and industrial film business to Hyundai BNG Steel earlier this year, but later the two companies agreed to cancel the deal.

The automotive and industrial film division seems to have recovered as it recorded an operating loss of 5 billion won in the first half of this year. It posted an operating loss of 45.3 billion won in 2020.

Analysts expect the company to generate an operating profit of 107 billion won this year, up by 30 billion won from a year ago. Its net borrowing decreased from 994.6 billion won in 2019 to 600.2 billion won at the end of June, with its total borrowings and bonds payable to total assets ratio declining from 44.5% to 36.2%. (Reporting by Woo-chan Lee)