[Funding] Samsung C&T Subsidiary Seoul Lakeside Raises 45 Billion KRW Refinancing Funds

[Asia Economy Reporter Lim Jeong-su] Seoul Lakeside, a subsidiary of Samsung C&T Corporation, has raised 45 billion KRW in funds. The funds are intended to repay existing borrowings used for operating capital at the Lakeside CC golf course located in Yongin.

According to the investment banking (IB) industry on the 18th, Seoul Lakeside recently received a one-year maturity loan of 45 billion KRW from a special purpose company (SPC) established under the lead of Kookmin Bank. The SPC issued short-term notes backed by the principal and interest of the loan repaid by Seoul Lakeside to secure the loan funds.

The lead manager, Kookmin Bank, provided credit support to the SPC. In case of a shortage of funds to repay the short-term notes due to Seoul Lakeside’s failure to repay the loan, Kookmin Bank has agreed to provide up to 45 billion KRW.

Overview of the membership-only South Course at Lakeside CC

Seoul Lakeside is an unlisted affiliate wholly owned by Samsung C&T Corporation. Samsung C&T and Everland acquired shares at an 80:20 ratio in 2014, but after the merger of Samsung C&T and Everland, Samsung C&T’s ownership became 100%. Currently, it operates the members-only golf course Lakeside CC located in Yongin.

The raised funds are reportedly planned to be used for repaying existing borrowings. Seoul Lakeside has previously borrowed operating funds from Kookmin Bank, Woori Bank, and others. When Samsung acquired it, the company also took on a debt burden of around 140 billion KRW.

Recently, with improved cash flow from the golf course, loan repayments have been made steadily, resulting in a decreasing trend in total borrowings each year. Since Samsung’s acquisition, the company has been repaying loans in net amounts of 10 to 20 billion KRW annually. As of the end of last year, total borrowings had decreased to 61 billion KRW.

Performance has also shown steady improvement. The golf course’s sales, which were around 48 billion KRW, exceeded 50 billion KRW in 2019 and increased to 52.6 billion KRW last year. Annual operating profit, which was about 15 billion KRW at the time of Samsung’s acquisition, surpassed 20 billion KRW last year.

An IB industry insider said, "Lakeside CC is a members-only golf course, so its performance improvement is not as dramatic as that of public golf courses, which saw explosive sales growth after COVID-19, but it is steadily improving," adding, "Based on stable cash flow, it is reducing borrowings every year."