Article
Corporate Finance
SK Group seeking sale of SK Shipping subsidiary
May 20, 2020
undefined mins
South Korean conglomerate SK Group has announced that it is selling its shipping subsidiary SK Shipping amid issues with debt and poor market growth
The majority stake has a buyer in private equity investment company Hahn & Co, which is purchasing up to 90% of SK Shipping for US$1.35bn according to Business Korea.
Hahn & Co’s portfolio already includes H-Line Shipping, as well as a range of industrial, consumer, auto, media, and IT firms.
Pulse, of Maeli Business News Korea, said that SK Shipping has faltered under “a growing debt burden amid an industry slowdown,” as well as “the government’s strengthening watch over business groups’ in-house trading.”
The Fair Trade Commission has updated its regulatory rules to include intra-group deals if family members hold 20% in the business, down from 30%, Pulse added.
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In addition, any subsidiaries in which the listed firms own a 50% or greater stake are also included. SK Shipping fulfils both of these amended regulatory rules.
SK Shipping, founded in 1982 as Yukong Shipping, entered into a large-scale loan following the global financial crisis and has yet to recover from the debt accrued despite business restructuring and bond sales.
Business Korea noted that “SK Shipping’s debt rate stood at 2,391 percent and the amount of its debts reached 4.4 trillion won (US$3.96 billion).”
The sale will end SK Group’s 36-year-long activity in the shipping industry.
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