Credit Rating Industry: "Hanwha Hotels Faces Short-Term Financial Burden Increase Due to Ourhome Acquisition"

"Business portfolio concentrated on resorts and hotels can be diversified"

Credit rating agencies on the 12th assessed Hanwha Hotels & Resorts' (Hanwha Hotel) attempt to acquire Ourhome, stating that while business diversification is possible, short-term financial burdens are expected to increase.

In a report released that day, Korea Ratings stated, "Considering Hanwha Hotel's consolidated cash assets as of the end of September 2024 (138.9 billion KRW) and operating cash flow (35.9 billion KRW in 2023), the financing required for equity investment and acquisition financing through an SPC (Special Purpose Company) is expected to increase financial burdens in the short term."

They particularly pointed out, "Since there remains the possibility of acquiring the remaining shares held by former Vice Chairman Gu Bon-seong, the owner of Ourhome, and former Vice Chairman Gu Ji-eun, it is necessary to review the level of financial burden and the trend of financial stability."

Furthermore, regarding Ourhome, they noted, "In assessing creditworthiness following the change of the largest shareholder, additional review is needed on the potential fluctuations in captive (affiliate) volume, dividend payout ratio, and the level of financial burden linked to the detailed structure of acquisition financing."

Korea Investors Service also stated that Hanwha Hotel "will inevitably face increased borrowing burden and deterioration in financial stability indicators due to the large-scale acquisition expenditure compared to its liquidity and operating cash flow," but added, "After acquiring the shares, Ourhome's operating performance is expected to be consolidated into Hanwha Hotel's financial statements, enabling consolidated scale growth and business portfolio diversification."

Hanwha Hotel announced the day before that it had signed a stock purchase agreement to acquire 58.6% of Ourhome's shares for 869.5 billion KRW.

Hanwha Hotel will initially acquire only 50.62% of Ourhome's shares. The remaining 8.0% owned by former Vice Chairman Gu Bon-seong is planned to be purchased through a third party within an agreed period between the parties.