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Woongjin bought Coway. 3 months later it’s selling it.

The group got back its old affiliate but then ran out of money
June 28,2019
Woongjin Group will sell-off its controlling stake in Woongjin Coway, its home appliance rental service arm, to secure liquidity.

The group announced Thursday that it will sell its 25.08 percent stake in the rental service unit. The decision comes just three months after it bought back Coway, which was founded as a Woongjin unit in 1989.

Back in 2013, the group sold off Coway to a private equity fund as it faced a financial crisis.

Woongjin said selling Coway again is necessary to minimize the group’s financial risk, despite the effort it put into buying back the rental unit in the first place.

Soon after the acquisition of Coway, the group’s solar business affiliate Woongjin Energy filed for court receivership last month “in an unexpected event.” This led to the credit rating of the group’s holding unit Woongjin Corporation to be downgraded from BBB+ to BBB-, making it difficult for the company to secure funds to pay back the debt incurred in purchasing Coway.

Woongjin acquired a 22.17 percent stake in Coway for 1.68 trillion won ($1.45 billion) then injected an extra 200 billion won to take its total stake to 25.08 percent. In the process, the company borrowed some 1.6 trillion won.

Woongjin said there will be no problem clearing its debt once Coway is sold, thus freeing the group from financial risk.

After selling Coway, the company is planning to also sell off two additional affiliates - book retail service provider Booxen and theme park operator Woongjin Playdoci - to secure additional cash for the stable management of the rest of the group.

“We are sorry to have to sell Woongjin Coway again after putting in so much effort to buy it back,” a spokesperson from Woongjin said. “But we concluded it is the way to increase the value of both Woongjin Group and Woongjin Coway.”

Shares of Woongjin Coway rose 3.2 percent to 83,900 won on Thursday.

The sale of the rental company will be managed by Korea Investment & Securities.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]