Woongjin Units Tumble in Seoul on Parent’s Receivership
Woongjin Coway tumbled by the daily limit of 15 percent to 36,150 won at the close on the Korea Exchange, its steepest loss since June 2002. Woongjin Chemical Co. and Woongjin Energy Co., units of the Woongjin Group, both slid by 15 percent, while Woongjin Holdings Co.’s shares were suspended from trading. The benchmark Kospi index added 0.4 percent.
The group halted the 1.2 trillion won ($1 billion) sale of a 31 percent stake in Coway to buyout fund MBK Partners Ltd. after the holding company and its unlisted unit Kukdong Engineering & Construction Co. applied for receivership to Seoul Central District Court yesterday. Woongjin was selling Coway as part of a plan to cut debt, which swelled after acquiring a construction business in 2007.
“Investors don’t have exact, detailed information on how bad Woongjin Group’s situation is, creating a big uncertainty,” Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion, said by telephone today. “There seems to be concern that it will have negative spillover effects on group affiliates.”
A meeting of Coway shareholders’ to approve the stake sale, which was scheduled for today, has been delayed until Nov. 9, the water-purifier maker said in a regulatory filing without giving reason for the change.
Coway last year took 55 percent of the country’s water- purifier market and 44 percent of the market for air cleaners, according to a regulatory filing. The company posted a profit of 161.2 billion won on sales of 1.82 trillion won in 2011.
Progress on the Coway sale to MBK Partners appears to be difficult with uncertainties arising from the court receivership process, which usually takes about six months, Credit Suisse Group AG analysts Sonia Kim and Ray Kim said in a report today.
Officials of MBK Partners did not answer Bloomberg News telephone calls or reply to e-mails seeking comment.
Separately, the group said in a Sept. 21 regulatory filing that it hired Woori Investment & Securities Co. as adviser as it seeks to sell a polysilicon unit.