Hyosung Chemical's Specialty Gas Division Sale Falls Through... Credit Rating Outlook Downgraded to 'Negative'

Decision to Withdraw Sale of Specialty Gas Division Due to Negotiation Breakdown
Failed Talks with Winning Bidder Stick·IMM PE Consortium
Korea Credit Rating Revises Hyosung Chemical Credit Rating Outlook to 'Negative'

Hyosung Chemical has withdrawn the selection of the preferred bidder for the sale of its specialty gases division.

According to a disclosure on the electronic disclosure system on the 20th, Hyosung Chemical stated that the decision was made because negotiations with the private equity fund (PEF) operators Stick Investment and IMM Private Equity (PE) consortium did not reach a mutual agreement.

The specialty gases division produces nitrogen trifluoride (NF3), which is used in semiconductor and display manufacturing processes. Hyosung Chemical had selected the consortium as the preferred bidder in July, but the sale process was canceled after negotiations broke down.

At the time of selecting the preferred bidder, the market expected the deal to be around 1 trillion KRW. However, the negative outlook for the semiconductor industry, a key upstream sector, appears to have led to the breakdown of negotiations.

Meanwhile, Korea Ratings (Korea Shin Credit Rating, KCR) maintained Hyosung Chemical’s unsecured bond credit rating at 'BBB+' but downgraded the rating outlook from 'stable' to 'negative.' This is due to the continued weak financial structure caused by increased borrowings and prolonged accumulated losses. Additionally, the shortening of the maturity structure has increased liquidity management burdens, and the polypropylene (PP) supply and demand environment is unfavorable, making it difficult to normalize profitability in the short term.

KCR emphasized the importance of promptly completing financial structure improvement measures such as the sale of the specialty gases division, warning that if the results of these measures are delayed, the credit rating downgrade could accelerate due to continued poor performance and increased liquidity management burdens.