[Funding] Doosan Secures 200 Billion KRW Financing Backed by Future Sales

Electronic Business Division Sales as 'Repayment Source'

[Asia Economy Reporter Park Jihwan] Doosan, the holding company of Doosan Group, has raised 200 billion KRW by securitizing future sales. Despite nearly two years of intensive restructuring efforts, credit recovery has not significantly improved, leading the company to secure liquidity by advancing future sales.

According to the investment banking (IB) industry on the 3rd, Doosan received a 200 billion KRW asset-backed loan (ABL) by securitizing future accounts receivable of its Electronics Business Group (Electronics BG), underwritten by KB Securities. Doosan sold the accounts receivable to a special purpose company (SPC) named ‘Dpay Je Samcha,’ which then used these as underlying assets to obtain the ABL. The ABL is structured with a senior tranche of 90 billion KRW and a subordinated tranche of 110 billion KRW based on repayment priority. The loan maturity is three years, with Doosan having the option for early repayment before maturity. Hana Bank and others participated as lead lenders.

Sales generated from Doosan’s Electronics BG will be used as repayment sources for the ABL. The Electronics BG’s annual sales range from 600 billion to 700 billion KRW, which is considered sufficient to cover loan repayments. If the accounts receivable are not properly collected, Doosan bears the responsibility for debt repayment. An IB industry official stated, "Doosan also raised 150 billion KRW in 2020 using the same method," adding, "This time, the loan amount was increased to receive another ABL." A Doosan Group official said, "Although the existing ABL has more than one year until maturity, we decided to refinance the maturity funds early because we could secure funds at a lower interest rate than the existing loan."

In June 2020, Doosan Group signed an agreement with creditors including the Korea Development Bank and the Export-Import Bank of Korea to improve its financial structure and received emergency funding of 3 trillion KRW. Through self-help efforts such as selling non-core assets, the group raised over 3 trillion KRW to repay debts to the Korea Development Bank and the Export-Import Bank within three years. To implement the self-help plan, Doosan Group sold assets worth about 3 trillion KRW, including Doosan Infracore (850 billion KRW), Dongdaemun Doosan Tower (800 billion KRW), Doosan Solus (698.6 billion KRW), Doosan Motrol Business Unit (453 billion KRW), Club Mow CC (185 billion KRW), and Neoplux (73 billion KRW).

Although Doosan Group has resolved liquidity crises over nearly two years through intensive affiliate sales and paid-in capital increases, its credit rating has not improved enough to independently raise funds. Currently, Doosan’s credit rating is only at the BBB level, making it difficult to attract funds easily from institutional investors.

The credit rating industry analyzed that whether Doosan Group’s subsidiaries provide additional support will play a crucial role in future credit rating assessments. Despite the group’s continuous efforts to improve its financial structure, the possibility of increased financial burdens on affiliates cannot be excluded, so potential support obligations negatively affect the credit rating. Choi Jung-gi, head of Corporate Evaluation 1 at NICE Credit Rating, said, "The support burden for affiliates such as Doosan Heavy Industries is a negative factor for credit rating," adding, "Although the company maintains sound business performance and financial stability on its own, the final credit rating was downgraded compared to its standalone creditworthiness due to the high support burden related to affiliates."

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