[Funding] Seobu T&D Secures 380 Billion Won Liquidity Amid COVID-19

Yongsan Dragon City Hotel Bird's-eye View

[Asia Economy Reporter Lim Jeong-su] Seobu T&D has raised 380 billion KRW amid prolonged difficulties in its hotel business due to the COVID-19 pandemic. It is understood that the company proactively secured liquidity to repay maturing borrowings.

According to the investment banking (IB) industry on the 4th, Seobu T&D received a loan of 380 billion KRW from a group of lenders at the end of September. The loan has a maturity of three years, with a lump-sum principal repayment scheduled for September 2023. The interest rate has not been disclosed. Seobu T&D provided its real estate holdings as collateral during the loan process.

The loan was executed in two tranches without priority on collateral rights: Tranche A worth 280.5 billion KRW and Tranche B worth 99.5 billion KRW. Financial institutions, including banks such as Shinhan Bank and Hana Bank, participated as lenders.

Seobu T&D plans to use the secured liquidity to repay borrowings maturing in the future. With a high short-term repayment burden and the COVID-19 pandemic causing poor performance at its cash cow, the Yongsan Dragon City Hotel, the burden of loan repayment has increased.

As of the end of June this year, consolidated borrowings stood at 784 billion KRW, which has not decreased since the development of the Yongsan hotel. Among these, 109 billion KRW in short-term borrowings and 466 billion KRW in current portion of long-term debt must be repaid or refinanced within one year.

An IB industry official said, "Due to COVID-19, not only the hotel but also the Incheon complex shopping mall (Square One) is suffering performance setbacks," adding, "Although there is a large financial buffer due to extensive real estate holdings, if the situation prolongs, the ability to repay borrowings could sharply deteriorate."