Woongjin Group said Thursday that the group will resell water purifier business Coway, just three months after completing its reacquisition, to stave off financial risks.
The group will seek to sell a 25.08 percent stake in Woongjin Coway by hiring Korea Investment and Securities as an overseer.
Woongjin had sold the unit to private equity MBK Partners in 2013. Then, in March, the group repurchased a 22.17 percent stake from the PE for 1.68 trillion won. It later bought an additional 2.91 percent stake for around 200 billion won.
At the time, Woongjin Group Chairman Yoon Seok-geum said the group would restart the water purifier rental business and expand it in light of the growing rental market for home appliances.
According to the financial market, Woongjin received 1.1 trillion won in loans from Korea Investment and Securities to regain Coway and also used 500 billion won worth of convertible bonds issued by the group’s parent company, Woongjin Thinkbig.
 |
(Yonhap) |
The group’s worsening financial situation is the major reason for the resale of Coway, it said in a statement.
Right after completing the Coway acquisition deal in March, the group’s photovoltaic business, Woongjin Energy, applied for a workout program. And the group’s holding firm, Woongjin Corp., had its credit rating downgraded from BBB+ to BBB-, increasing its financing costs.
“We seriously considered the resale of Coway, which has been the longtime leader of the rental market,” a group official said. “In order to minimize shocks on the market and damage to the group, the decision was made to resell Coway within a year.”
After the announcement, Woongjin Corp.’s shares tumbled 14.29 percent to 2,040 won as of 2:20 p.m.
On the other side of the fence, Woongjin Coway’s shares climbed 2.21 percent to 83,100 won.
Woongjin Coway posted 2.7 trillion won in sales and 520 billion won in operating profit last year, having grown about 10 percent from a year earlier.
In order to secure more funds, the group is planning to sell two other affiliates, Booxen and Woongin Playdoci.
After selling Coway, the group will be able to repay the 1.6 trillion won it borrowed to acquire the water purifier business, the group said. It also has 100 billion won in cash.
By Song Su-hyun (
song@heraldcorp.com)
