[Funding] Woongjin Accelerates Debt Response Using 'Woongjin ThinkBig' Shares

[Asia Economy Reporter Lim Jeong-su] Woongjin is using its core affiliate Woongjin ThinkBig's shares to manage the maturity of its borrowings. Amid deteriorating performance, Woongjin's borrowings surged significantly during the process of reselling Coway just months after reacquiring it.

Woongjin recently announced it will issue 40 billion KRW worth of private bonds secured by Woongjin ThinkBig shares. The maturity is one year with an interest rate of 3.90%. DB Financial Investment is acting as the lead arranger for the funding. The value of the Woongjin ThinkBig shares provided as collateral is 80 billion KRW. The loan-to-value ratio (LTV) against the total share value is 50%. Woongjin ThinkBig’s market capitalization is about 450 billion KRW, and approximately 17% to 18% of the total shares have been pledged as collateral for the private bonds.

In June, Woongjin also raised 30 billion KRW by issuing exchangeable bonds (EB) with Woongjin ThinkBig shares as the exchange target. The EB maturity is five years, but bondholders can request early redemption every three months starting two years after issuance. The exchangeable shares total 5.41%, valued at 30 billion KRW at the time. Due to a recent decline in Woongjin ThinkBig’s stock price, the value of the exchangeable shares has fallen below 25 billion KRW.

It is known that Woongjin has used or plans to use the funds raised in this way to repay borrowings. Borrowings increased during the process of reacquiring Coway in 2019 and then reselling it due to financial burdens on Woongjin Energy. The group went all-in by lending borrowings to Woongjin ThinkBig, the entity acquiring Coway, to support the acquisition payment.

Previously, Woongjin borrowed 100 billion KRW from Hanseokbong Jeilcha, providing collateral including Woongjin ThinkBig shares valued at 308.8 billion KRW on the books, third-priority beneficiary rights of Woongjin Playdoci real estate trust, and time deposits. Shares of the members-only golf course Rexfield, held by Woongjin Group Chairman Yoon Seok-geum, were also pledged as collateral to Hanseokbong Jeilcha.

As the maturity of the borrowed funds approached, liquidity long-term liabilities scheduled for repayment from April this year to March next year amount to 110 billion KRW. With performance improving, turning from an operating loss to profit last year, it is understood that most of the short-term borrowings exceeding 100 billion KRW that matured have been repaid.

An investment banking (IB) industry insider said, "With the growth of the non-face-to-face education market after COVID-19, the performance of education-related affiliates like Woongjin ThinkBig is improving," adding, "However, it is still difficult to raise funds solely on their own credit without collateral, so they are using shares of the core affiliate Woongjin ThinkBig to manage borrowings."