[Funding] Daelim Corp Issues 160 Billion Private Bonds for Homeplus Store Acquisition

Borrowing Subordinated Funds via Ulsan Uijeongbu PFV
For Acquisition of Homeplus Ulsan Nam-gu and Uijeongbu Branches
Daelim-IBK Securities TRS Agreement

[Asia Economy Reporter Lim Jeong-su] Daelim Corporation, the holding company of Daelim Group, has raised 160 billion KRW to acquire two Homeplus stores located in Nam-gu, Ulsan, and Uijeongbu. Daelim is expected to operate these stores under a long-term master lease agreement with Homeplus and later undertake redevelopment projects utilizing the large land areas.

According to the investment banking (IB) industry on the 20th, Daelim issued 157 billion KRW of subordinated private bonds through 'Ulsan Uijeongbu Project PFV (Ulsan Uijeongbu PFV)'. The maturity is 30 years, with principal and interest repayment scheduled for January 2051, but even after maturity, it can be extended every six months. Additionally, after three years from issuance, partial or full early repayment of the borrowings is possible every six months.

IBK Investment & Securities acquired the private bonds issued by Ulsan Uijeongbu PFV through a special purpose company (SPC). The SPC then issued securitized securities backed by the principal and interest of the private bonds to raise acquisition funds.

In this process, Daelim signed a total return swap (TRS) contract with IBK Investment & Securities. Daelim guarantees a certain level of principal on the private bonds to the SPC and agrees to bear all profits and losses arising from the subordinated bonds issued by Ulsan Uijeongbu PFV. Effectively, Daelim assumes full acquisition of the subordinated bonds.

An IB industry official stated, "The yields on the preferred shares and subordinated bonds issued by Ulsan Uijeongbu PFV are known to be quite high," adding, "Through the TRS contract, Daelim was able to raise funds in a structure that allows high returns without directly increasing its borrowing scale."

Daelim will use the funds raised in this manner to pay for the acquisition of the two Homeplus stores held by Yukyung PSG Asset Management. The two stores are the Ulsan Nam-gu store located at 789-9 Yaeum-dong, Nam-gu, Ulsan Metropolitan City, and the Uijeongbu store located at 475-1 Geum-o-dong, Uijeongbu, Gyeonggi Province.

Yukyung PSG Asset Management put the two stores on the market as the maturity of the real estate fund approached. In October last year, Daelim Corporation was selected as the preferred bidder and has been conducting detailed negotiations. The acquisition price for the two stores is known to exceed 320 billion KRW significantly.

Daelim is expected to operate the Homeplus stores under long-term lease agreements before proceeding with development projects. Since the master lease contracts with Homeplus still have a long time remaining, it is anticipated that immediate development on the sites will be difficult.

An industry insider commented, "The area around Yaeum-dong, Nam-gu, Ulsan, where the two stores acquired by Daelim are located, is currently undergoing active redevelopment, and the Uijeongbu store's vicinity is expected to see development potential with the upcoming GTX station," adding, "Daelim has secured prime locations that offer stable rental income while holding future development potential."

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