Korea Kipyeong registered as subject to ‘negative review’
Ssangyong C&E
[쌍용씨앤이 홈페이지 캡처. 재판매 및 DB 금지]
(Seoul = Yonhap News) Reporter Bae Young-kyung and Song Eun-kyung = Credit rating agencies said on the 6th that Ssangyong C&E[003410]Regarding Ssangyong C&E (hereinafter referred to as Ssangyong C&E)’s decision to undertake a tender offer with its largest shareholder, Han & Co Cement Holdings, concerns were expressed, saying that there was a burden on financial stability.
The day before, Han & Co Cement Holdings, together with Ssangyong C&E, announced that it would make a tender offer for 100 million shares of Ssangyong C&E by the 6th of next month. This is approximately 20.1% of the total number of issued shares, and the tender offer price is 7,000 won per share.
Of the total amount of KRW 702.9 billion required for the tender offer, Ssangyong C&E holds KRW 155 billion and Han & Co Cement Holdings holds KRW 87.9 billion as its own funds, and the insufficient funds will be raised through short-term borrowing. The amount raised is 180 billion won for Ssangyong C&E and 280 billion won for Han & Co Cement Holdings.
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Korea Ratings issued a related report on the same day, saying, “Ssangyong C&E’s direct participation in this tender offer has resulted in a capital requirement of 335 billion won,” and “the effect of improving the financial structure through the sale of Ssangyong ready-mixed concrete will be significantly diluted.” “I was concerned.
In addition, with the borrowing of 180 billion won, Ssangyong C&E’s borrowing burden will increase again, and it was judged, “Considering the scale of this purchase of treasury stocks in addition to the burden of existing dividend payments, it will take time to improve the financial structure to a meaningful level.”
In addition, it was pointed out that uncertainty in overall management is increasing due to the strengthening of the control of private equity fund Hahn & Company. Hahn & Co Cement Holdings is a special purpose corporation of Hahn & Company.
“As Han & Company’s control is further strengthened, factors for change in overall management have arisen, such as shareholder return policies including dividend payments and the possibility of a full-fledged sale of management rights,” the Korea News Service said, adding that it would intensively monitor these aspects in the future.
On this day, Korea Ratings maintained Ssangyong C&E’s unsecured bond credit rating at A for similar reasons, but registered it as subject to ‘negative review’.
‘Negative review’ is a type of rating monitoring (forecast at the time of evaluation of the direction of the credit rating within a maximum of 3 months), and refers to a case where there is a possibility of factors having a negative effect on the rating.
Korea Kipyeong explained that it was registered for rating surveillance in relation to the tender offer of Ssangyong C&, which the largest shareholder, Han & Co Cement Holdings, is conducting for the purpose of incorporating it as a complete subsidiary, reflecting the increased financial burden and the possibility of changes in dividend policy after delisting.
Korea Investment & Securities said, “With this tender offer, Ssangyong C&E will bear about 335 billion won in funds, so the net borrowings will expand to about 1.6 trillion won,” adding, “As a result, the debt ratio will increase, while the dependence on borrowings and EBITDA will increase.” (Operating profit before amortization)/Financial expenses will also worsen,” he predicted.
He added, “We plan to monitor the progress of Ssangyong C&E’s financial stability, including the progress of the tender offer, the increase in borrowings during the tender offer, and changes in financial indicators due to changes in dividend policy after the tender offer.”
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2024/02/06 17:58 Sent
2024-02-06 08:58:44
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