by Ryu Hyunseok
Published 12 Aug.2025 11:37(KST)
On August 12, Korea Ratings analyzed that even if shareholder support for Yeochun NCC is confirmed, concerns over its liquidity management capabilities will persist unless there is an improvement in cash flow.
Yeochun NCC is a joint venture established in April 1999 with equal 50% investments from Hanwha Solutions (formerly Hanwha Petrochemical) and DL Chemical (formerly Daelim Industrial). It ranks third in domestic ethylene production capacity, with a 14% market share. Its performance has sharply deteriorated due to a supply glut from China that began in earnest in the 2020s.
Korea Ratings stated, "Recent delays in negotiations over long-term supply contracts between shareholders and moves by some financial institutions to reduce credit lines have weakened the company's ability to raise funds," adding, "If additional shareholder support, such as capital injections or loans, is not provided in a timely manner, it will be uncertain whether the company can respond to upcoming debt maturities."
At the end of July, Hanwha Solutions completed a board resolution for a 150 billion won capital support for Yeochun NCC. However, DL Chemical has not yet finalized its decision regarding support for Yeochun NCC. Under the 50-50 joint venture agreement, capital support cannot be executed without the consent of both shareholders.
Nevertheless, Korea Ratings projected a high likelihood that the two companies will reach an agreement. Korea Ratings assessed, "Considering that DL and Daelim decided on a 200 billion won paid-in capital increase on August 11, it appears that DL Chemical has secured the resources needed for capital support," and added, "The likelihood of reaching an agreement on the method and scale of support between Hanwha Solutions and DL Chemical has increased."
As of the end of June this year, Yeochun NCC held about 895.4 billion won in short-term borrowings and usance. Long-term borrowings maturing in the second half of the year amount to 198.8 billion won (70% of the 70 billion won in corporate bonds have already been refinanced, and the remaining approximately 70 billion won in bonds are also expected to be partially refinanced). Borrowings maturing in 2026 total 517.5 billion won.
Korea Ratings stated, "While the company appears likely to respond through unused credit lines and refinancing using tangible assets as collateral, we believe that uncertainty surrounding refinancing and maturity extensions has increased."
They further emphasized, "Even if the shareholder support currently under discussion is confirmed, the company's own fundraising capacity has weakened. Therefore, if there is no improvement in cash flow, concerns over liquidity management capabilities may persist."
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