Paratech's Third Sale Contract... Buyer Borrows Full Deposit Amount

Major Shareholder's 32.7% Stake Transfer Agreement
Previous Two Contracts Failed
Buyer Secures Deposit Through Full Loan Financing

Paratek homepage capture.

[Asia Economy Reporter Jang Hyowon] BaseHD, the largest shareholder of fire-fighting equipment manufacturer Paratech, has put Paratech’s shares up for sale. This is the third attempt. BaseHD had tried to sell Paratech since early last year, but the deals fell through twice due to mismatched conditions or the buyer’s failure to pay the remaining balance.

The buyer who signed the contract this time secured the entire deposit, which is about 10% of the acquisition price, through loans. As a result, the market is focusing on whether the buyer can smoothly pay the remaining 38 billion KRW.

According to the Financial Supervisory Service’s electronic disclosure on the 13th, BaseHD, the largest shareholder of Paratech, signed a contract on the 7th to transfer 5,553,192 shares (32.69%) at 7,600 KRW per share, totaling 42.2 billion KRW, to NSE&G.

NSE&G is a corporation established in 2018 with a capital of 10 million KRW, engaged in piping materials and mechanical equipment construction business. As of last year, it recorded sales of 600 million KRW and a net loss of 50 million KRW. Its total assets amount to 221 million KRW, with total liabilities of 320 million KRW, putting it in a state of complete capital erosion.

NSE&G paid 4.22 billion KRW, which is 10% of the purchase price, as a deposit on the 7th. The deposit was borrowed from Hurim Robot at an annual interest rate of 6%. NSE&G did not use any of its own funds.

Hurim Robot is a company that manufactures industrial robots such as Cartesian coordinate robots and service robots. On a consolidated basis, it recorded cumulative sales of 10 billion KRW, an operating loss of 2.6 billion KRW, and a net loss of 2.7 billion KRW in the first half of this year. The 4.22 billion KRW loaned to NSE&G corresponds to 14.82% of Hurim Robot’s equity capital.

NSE&G must pay 14.3 billion KRW as the middle payment by November 11 and 23.7 billion KRW as the remaining balance by December 31. This means it must raise an additional 38 billion KRW after having financed the entire deposit through borrowing.

Previously, Paratech’s sale was canceled twice. The first was on August 13 last year, when BaseHD signed a contract to transfer 9,257,736 shares (54.51%) at 7,021 KRW per share, totaling 65 billion KRW, to Pavilion PE. After about three months of price negotiations, BaseHD paid Pavilion PE a contract cancellation fee of 150 million KRW and terminated the contract.

The second was on March 27 this year, when BaseHD signed a contract to transfer 6,152,192 shares (36.22%) at 6,800 KRW per share, totaling 41.8 billion KRW, to Lux Cosmetic, THCNS, CIBNK, East Asia Hyean, and others.

This contract was canceled after the buyers failed to pay the remaining balance by the deadline of April 24, and BaseHD forfeited the deposit of 2.1 billion KRW.

Meanwhile, Paratech produces fire-fighting products such as sprinkler heads, kitchen automatic fire extinguishing devices, and fire-fighting synthetic resin pipes. Its sales plummeted last year, recording an operating loss of about 37 billion KRW, but in the first half of this year, domestic market sales of fire-fighting machinery and equipment grew, leading to a return to profitability.

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