Woongjin, creditors in discord on sale of water purifier

Woongjin Group appears to be at odds with its creditors over the sale of Woongjin Coway Co., a leading local water purifier maker that serves as a cash cow for the mid-size ailing conglomerate, industry sources said Thursday.

Woongjin Holdings, the parent company of Woongjin Coway, pushed for the sale of its 30.9 percent stake, or 21.88 million shares, in the purifier unit to MBK Partners Ltd., a leading local private equity fund, for 1.2 trillion won ($1 billion).

The stake sale, however, was suspended as Woongjin Holdings and Kukdong Engineering & Construction Co. filed for court receivership last month after the group’s construction arm failed to repay promissory notes worth 15 billion won.

Last month, creditors asked the court to quickly go ahead with the sale of the water purifier maker on the grounds that Woongjin could pay back debts with proceeds from the stake sales. Woongjin Holdings said it owes 600 billion won to its creditor banks.

However, the group’s chairman Yoon Seok-keum, who owns a 70 percent share of Woongjin Holdings, showed reluctance to sell the group’s core affiliate, though he said earlier this month he will follow the decision of the creditors and the court over the stake sale.

Market participants view the stake sale of Woongjin Coway as a way to save the ailing business group, noting there seems to be no other way to secure liquidity other than the sale.

MBK Partners, which paid 60 billion won to Woongjin Holdings as a deposit, plans to ask the court to move forward the stake sale as originally scheduled, according to a source. An email to MBK Partners seeking comment went unanswered.

There is a dominant view that Woongjin Group does not want to sell Woongjin Coway, though the group cannot openly oppose the stake sale due to its management failure.

Woongjin Holdings reportedly told the court last month when it filed for court receivership that it wanted to terminate the deal with MBK Partners and would push for the stake sale again in 2014.

The Seoul Central District Court asked creditors, MBK Partners and Woongjin Holdings to appear before the court on Oct. 25, according to a Woongjin Holdings official. He said the proposed meeting could be aimed at discussing how to handle the stake sale of Woongjin Coway.

On Thursday, the Seoul Central District Court placed the two affiliates under its protection and allowed the affiliates’ two current heads to serve as the affiliates’ legal administrators. (Yonhap News)