Chorokmaeul Closes LOI Submissions Today... Acquisition Prospects Unclear as Liquidation Fears Grow

First Test After Switch to Public Sale
Absence of LOIs Signals 'Lack of Strong Interest'
Liquidation Value High at 16.1 Billion Won
Bankruptcy and Liquidation Scenario Becomes Reality if No Bids Received

Chorokmaeul, which is currently undergoing corporate rehabilitation proceedings, will close the acceptance of Letters of Intent (LOI) for acquisition-the first gateway to finding a new owner-on December 5. If there are no LOIs submitted or if the number is low, the likelihood of bankruptcy or liquidation increases significantly. Therefore, the results of this LOI submission are expected to be a critical turning point in determining the success or failure of Chorokmaeul's merger and acquisition (M&A).

According to the investment banking (IB) industry on December 5, Samil PwC, the lead manager for the sale of Chorokmaeul, will accept LOIs from potential buyers until 3:00 p.m. that day. Chorokmaeul initially attempted to sell the company through a "stalking horse" method, which involves designating a conditional preferred bidder and then conducting an open competitive auction. However, after failing to secure a conditional preferred bidder, the process shifted to a public sale at the end of last month. Previously, KK Holdings emerged as a strong candidate for acquisition by attempting to secure management rights through the purchase of existing shares from Shinhan Capital, Chorokmaeul's largest creditor. However, this attempt failed due to opposition from the creditors.

The key point to watch in this sale process is whether any companies submit an LOI. Since the LOI is not legally binding, some companies may skip this step and participate only in the main bidding. However, the market generally interprets the absence of LOIs as a lack of active acquisition interest, and there are concerns that the main bidding, which closes on December 22, could end without any bids.

The main challenge for the success of Chorokmaeul's M&A is the high level of difficulty due to the requirement that the acquirer must offer a price higher than the liquidation value. According to the assessment by the investigation committee, Chorokmaeul's liquidation value is estimated at approximately 16.1 billion won, which is reportedly higher than its going-concern value. This means that, from the perspective of potential buyers, the value realized from immediate liquidation exceeds the company's future value as a going concern, significantly reducing its investment appeal.

For a successful acquisition, a price exceeding the liquidation value must be offered. Even after excluding public interest claims of about 3 to 4 billion won, the sale price is expected to be set at a minimum of 12 to 13 billion won. As a result, there are cautious predictions in the market that it will not be easy to find a suitable buyer.

An IB industry insider stated, "Because the liquidation value is so high and the acquirer would also have to take on public interest claims amounting to several billion won, potential buyers are likely to approach this opportunity with great caution."

If there are no bidders in the main bidding scheduled for December 22, Chorokmaeul will lose its momentum for rehabilitation. In that case, the court plans to comprehensively consider the opinions of all stakeholders-including the debtor, the lead manager, and creditors-before deciding whether to initiate a second M&A process or to commence legal bankruptcy and liquidation proceedings.

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