[Asia Economy Reporter Lim Jeongsu] SSIK Daebu, a loan company affiliated with the SeAH Group, secured 20 billion KRW in liquidity with a joint guarantee from SeAH Steel Holdings. SeAH Steel Holdings also secured 5 billion KRW in funds together with SSIK. SSIK also serves as a cash reservoir for the SeAH Group by acquiring non-performing loans of Dong-A Steel, which was incorporated into the SeAH Group.
According to the investment banking (IB) industry on the 24th, SeAH Steel Holdings and SSIK Daebu took out a loan of 25 billion KRW with Bukuk Securities as the lead manager. The amount raised was 5 billion KRW for SeAH Steel Holdings and 20 billion KRW for SSIK. Most of the loan is to be repaid within 1 to 3 months.
SeAH Steel Holdings provided a joint guarantee for SSIK's loan. If SSIK faces a loss of benefit of term or other default reasons, SeAH Steel Holdings is responsible for repayment up to 130% of the loan amount.
SSIK was established in 2017 as a 100% subsidiary of SeAH Steel Holdings. It acquired Dong-A Steel, which had entered court receivership, in 2018 and holds it as a subsidiary. It has financially supported the resolution and normalization of Dong-A Steel's insolvency. At one point, it also provided loans to SeAH Steel Holdings, acting as a cash reservoir for the SeAH Group.
The procured funds are reportedly planned to be used to repay short-term borrowings incurred from the acquisition of Dong-A Steel. In 2017, SeAH Steel Holdings acquired Dong-A Steel's non-performing loans through SSIK. After the rehabilitation process ended in 2018, SSIK became the largest shareholder holding 88.36% of Dong-A Steel's shares. Accordingly, a governance structure of 'SeAH Steel Holdings → SSIK → Dong-A Steel' was established.
The SeAH Group is broadly divided into two groups: the special steel division centered on SeAH Holdings and the steel pipe division centered on SeAH Steel Holdings. The special steel business is led by Vice Chairman Lee Taesung, eldest son of the late Chairman Lee Unhyung, and the steel pipe division management is handled by Vice Chairman Lee Juseong, eldest son of Chairman Lee Sunhyung.
Recently, as Vice Chairman Lee Juseong increased his stake in SeAH Steel Holdings, his control over the steel pipe division has been expanding. Besides SSIK, SeAH Steel Holdings has subsidiaries including SeAH Steel (39.94%), SeAH CM (100%), and SeAH Steel International (100%).
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