[Funding] Samkwang Glass Group Accelerates Liquidity Securing for Governance Restructuring

[Asia Economy Reporter Lim Jeong-su] Samkwang Glass, E-Tech Construction, and Gunjang Energy, subsidiaries of Samkwang Glass, are accelerating fund-raising efforts for a corporate governance restructuring.

According to the investment banking (IB) industry on the 27th, Samkwang Glass and E-Tech Construction recently borrowed 48.5 billion KRW from a special purpose company (SPC) established under the management of Shin Young Securities. Samkwang Glass borrowed 24 billion KRW, and E-Tech Construction borrowed 24.5 billion KRW. The loan maturity is six months, with principal and interest to be repaid in a lump sum at maturity.

Both companies borrowed funds on the condition that the spin-off and merger with Gunjang Energy would be completed. If the spin-off and merger procedures are not completed by the end of this month, the scheduled completion date for the governance restructuring, they agreed to repay the entire loan early. The raised funds are reportedly intended for use in the governance restructuring.

Earlier, Gunjang Energy issued corporate bonds worth 240 billion KRW. This was to secure funds needed to repurchase corporate bonds held by existing bondholders. During the pre-purchase application period for the bonds, the amount of bonds requested for early purchase before maturity reached 550 billion KRW, creating a need for additional fund-raising.

An IB industry official said, "Gunjang Energy needs to raise an additional approximately 300 billion KRW to pre-purchase corporate bonds," adding, "The most likely options are short-term borrowing from financial institutions or issuing commercial paper (CP)."

Samkwang Glass, E-Tech Construction, and Gunjang Energy have been promoting governance restructuring since March. The plan involves Samkwang Glass and E-Tech Construction undergoing physical and personnel spin-offs into investment and business companies, respectively, and then merging the two investment companies with Gunjang Energy.

The governance restructuring did not proceed smoothly. There was strong opposition from minority shareholders over the merger ratio, and the Financial Supervisory Service requested corrections to the merger-related securities reports twice. The National Pension Service also put a brake on the spin-off and merger, citing that the merger ratio and other factors would harm shareholder value.

Despite various difficulties, all related agenda items were safely passed as originally planned at the recent merger-related shareholders' meeting. Accordingly, the approximately eight-month governance restructuring process has reached its final stage.

Once the governance restructuring is completed, Gunjang Energy will hold 100% of Samkwang Glass shares and 30.7% of E-Tech Construction shares, placing it at the top of the governance structure. The existing governance structure, which was Samkwang Glass → E-Tech Construction → Gunjang Energy, will change to a structure where Gunjang Energy is at the top, controlling Samkwang Glass and E-Tech Construction in parallel.

The group control of third-generation management is also expected to increase. Through the three-company merger based on the merger ratio, the third generation’s control over Gunjang Energy will grow, and the shares of Gunjang Energy previously held by E-Tech Construction and Samkwang Glass will be converted into treasury stock, complementing the third generation’s group control.

When the merger is completed on the 31st, Gunjang Energy will be newly launched as SGC Energy. Additionally, the business division of E-Tech Construction will be renamed SGC E-Tech Construction, and the business division of Samkwang Glass will be renamed SGC Solution.

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