"Overcoming Crisis with KAMCO Support"…Cosmo Chemical Graduates First from 'Asset Purchase and Lease' Program

Kamco and Cosmo Chemical Sign Sales Contract Following Exercise of Right of First Refusal in 'Asset Purchase and Lease Program'

[Asia Economy Reporter Kwon Haeyoung] Korea Asset Management Corporation (KAMCO)'s program, which purchases and re-leases office buildings of medium-sized and small enterprises temporarily experiencing management difficulties to provide urgent new funding, is playing a strong supportive role for companies.

KAMCO will sign a sales contract on the 6th at the Busan International Finance Center (BIFC) with Cosmo Chemical for the exercise of the preemptive purchase right under the 'Asset Purchase and Leaseback Program.'

The Asset Purchase and Leaseback Program involves KAMCO purchasing factories and office buildings of companies temporarily facing liquidity crises and then re-leasing them. KAMCO provides new operating funds to the companies, and the companies are granted preemptive purchase rights on the sold assets as part of a management normalization support program. Cosmo Chemical overcame its management crisis through KAMCO's Asset Purchase and Leaseback Program applied for in 2016 and became the first supported company to exercise the preemptive purchase right, repurchasing its office building.

Cosmo Chemical is the only domestic producer of titanium dioxide (anatase) and is a medium-sized company occupying more than 90% of the domestic market. However, profitability gradually deteriorated due to expanded investment in new business facilities and a decline in product prices. While making self-help efforts such as changes in the governance structure and subsidiary sales, the company applied for KAMCO's Asset Purchase and Leaseback Program in 2016.

KAMCO highly evaluated Cosmo Chemical's technological capabilities and potential for management normalization, purchased the company’s office building, and provided urgent funds amounting to 35.8 billion KRW. Based on the supported funds, the company made self-help efforts, resulting in a turnaround to profitability, a significant reduction in debt ratio, and more than doubling of its stock price. Accordingly, Cosmo Chemical exercised its preemptive purchase right early after 3 years and 4 months and graduated from the Asset Purchase and Leaseback Program.

Kim Changsoo, Executive Director of Cosmo Chemical, said, "Thanks to KAMCO, we overcame the liquidity crisis during difficult times and were able to focus on promoting new businesses." He added, "Based on the repurchased assets, we will focus on developing materials for long fibers and pioneering new global markets."

Moon Sung-yoo, President of KAMCO, stated, "KAMCO operates various customized corporate support programs, including not only the Asset Purchase and Leaseback Program but also investment matching between companies and private investors, and DIP financing that supplies new funds to companies under rehabilitation." He added, "We will continue to spare no support for the swift recovery of medium-sized and small enterprises in management crises."

Meanwhile, last year KAMCO supported 10 companies with 162.1 billion KRW through the Asset Purchase and Leaseback Program, exceeding the annual policy target of 150 billion KRW. Since 2015, a total of 39 companies have been supported with 496.3 billion KRW. From the companies’ perspective, advantages include ▲reduction of debt ratio and relief from repayment pressure ▲maintenance of a stable business base through re-leasing sold assets ▲repurchase of assets after management normalization. Applications can be made through the online corporate information platform On-Gieop.

This content was produced with the assistance of AI translation services.