Ujeong Bio, Dongseo Gigong, etc., Receive 66 Billion KRW Injection via 'Real Estate Collateral + KAMCO Support' CDO

Hyundai Motor Securities Issues Securitized Bonds for Long-Term Loans to Companies
Five Mid-Sized and Small Businesses Secure Urgent Liquidity
Financial Improvement Effects Including Maturity Debt Repayment

Five mid-sized and small companies, including KOSDAQ-listed Woojeong Bio, secured a total liquidity of 66 billion KRW through collateralized debt obligation (CDO) methods. This successful emergency funding is expected to somewhat improve their financial conditions, as they faced difficulties in raising funds independently.

According to the investment banking (IB) industry on the 4th, Hyundai Motor Securities issued asset-backed securities (ABS) based on loan principal and interest as underlying assets and provided a total of 66 billion KRW in three-year maturity loans to five companies. Woojeong Bio secured the largest amount of 30 billion KRW through Hyundai Motor Securities' loan, followed by Dongseo Construction with 25 billion KRW. Hansung Seafood Food (5.2 billion KRW), Sujis Link (3.5 billion KRW), and Hansung Food (2.3 billion KRW) also secured liquidity.

To raise funds, Hyundai Motor Securities entrusted the loan assets to Kiwoom Securities Trust. Kiwoom Securities issued senior and subordinated trust securities worth 20 billion KRW and 40 billion KRW respectively to a special purpose company (SPC). The SPC issued senior and subordinated ABS based on beneficiary certificates to raise loan funds. In this process, each borrowing company provided their owned real estate as collateral to the SPC. Land and factories owned were used as collateral.

Korea Asset Management Corporation (KAMCO) provided side support by committing to purchase Class 1 trust beneficiary rights worth 20 billion KRW. If sufficient funds are not recovered to repay the senior ABS at loan maturity, KAMCO will purchase the senior trust beneficiary rights.

Among these, Woojeong Bio, which received the largest loan through this CDO, has been struggling with financial difficulties due to continuous deficits. It recorded losses for five consecutive years from 2017 to 2021 but posted a profit of 1.8 billion KRW in 2022. It returned to a loss last year but showed a profit of 2.1 billion KRW as of the end of the third quarter this year.

Meanwhile, as funding needs continued, borrowing burdens increased. Net borrowings, excluding cash equivalents from total borrowings, rose from 9.4 billion KRW in 2017 to 47 billion KRW as of the end of the third quarter this year. Of the total borrowings of 49.6 billion KRW, short-term borrowings that must be repaid within one year account for more than half at 25.4 billion KRW. Recently, it also attracted 2 billion KRW in investment through a third-party allotment paid-in capital increase.

In addition to Hyundai Motor Securities, Shinhan Investment Corp. also participated as an ABS issuance lead manager. An IB industry official said, "With the 30 billion KRW three-year maturity loan Woojeong Bio received this time, it will be able to repay short-term borrowings and convert the borrowing maturity structure to long-term, thereby reducing the burden of short-term debt repayment." The official added, "Dongseo Construction, Hansung Seafood Food, and others, who are also facing difficult financial conditions, will be able to improve their financial situation by securing liquidity through the CDO."

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