Cash-strapped Woongjin, which recently decided to resell its stake in water purifier rental firm Woongjin Coway, announced on July 24 that it will offer staple financing to the buyer.
Staple financing is a prearranged financing package offered to potential bidders for an acquisition. This is offered by the seller to assist its potential purchasers, who might have some difficulties borrowing money, mainly due to low brand awareness in the local market.
Woori Bank and Korea Investment &Securities will be managing Woogjin’s staple financing. The two staple financing organizers evaluated Coway’s corporate value to be around 2 trillion won ($1.70 billion) and decided to provide 1.23 trillion won as a loan.
According to sources, Woongjin decided to offer staple financing because its potential bidders are mostly strategic investors and private equity firms from overseas. Industry watchers viewed that this decision will take off the financial burden of potential bidders and encourage them to actively participate in the bid.
On June 27, cash-strapped Woongjin Group decided to resell its entire 25.08 percent stake in Coway within a year. The decision came only three months after the group’s educational contents provider arm Woongjin Thinkbig and Korean PEF STIC Investment closed the deal on March 22 to buy back a 22.17 percent stake from PEF MBK Partners.
Back in 2013, Woongjin sold off Woongjin Coway for 873 billion won to MBK Partners as part of its workout to remove leverage from a series of acquisitions, including builder Kukdong E&C.
By Song Seung-hyun (firstname.lastname@example.org)