BBC, Reason for Purchasing Factory Owned by Majority Shareholder

[Asia Economy Reporter Jang Hyowon] Dental material specialist company BBC is purchasing a new factory from a corporation owned by its major shareholders. Through this transaction, the major shareholders' corporation is expected to realize a profit of over 4.6 billion KRW.

According to the Financial Supervisory Service's electronic disclosure on the 20th, BBC decided to acquire land and buildings measuring 8,421.1㎡ located in Daedeok-gu, Daejeon Metropolitan City for a total of 11.8 billion KRW. This amount corresponds to 25.2% of BBC's total assets.

The land and buildings being acquired were partially leased by BBC and used as its 2nd factory. By purchasing the entire site, BBC plans to create an integrated space combining its existing 1st and 2nd factories.

BBC stated, "The acquisition is to expand production capacity through the addition of production lines," and added, "Also, by integrating the production workspaces that were divided between the 1st and 2nd factories, we will reduce costs and improve work efficiency."

BBC is a company primarily engaged in dental care-related businesses such as functional toothbrush bristles. Based on polymer spinning and processing technologies, it has built a diverse premium product portfolio in the toothbrush bristle market. As a new business, it is producing filter media and personal hygiene masks.

The party selling the factory this time is Wooshin Tech. Wooshin Tech is a company where Kang Yeonbok, the founder of BBC and former chairman, serves as CEO. Both former chairman Kang and current BBC CEO Kang Gitae each hold 25% of the shares.

Wooshin Tech acquired this land and building through an auction in 2017. Since then, it has leased the factory to BBC and received annual rent of about 300 to 400 million KRW.

Wooshin Tech is expected to realize a profit of approximately 4.6 billion KRW or more from this transaction. As of the end of 2018, the book value of this real estate was 7.2 billion KRW, with land valued at 3.3 billion KRW and buildings at 3.9 billion KRW. This time, BBC evaluated the land value at 8 billion KRW and the building value at 3.8 billion KRW for the purchase.

A BBC representative said, "The acquisition price was set based on an appraisal," and added, "With this acquisition, BBC will be able to reduce rental expenses."