Support Provided Through DL Chemical's Paid-in Capital Increase and DL Inc.'s Share Acquisition
Support Plan Announced Following Hanwha Solutions' 'First to Support' Declaration
Oversupply from China Triggers Signs of Restructuring in the Petrochemical Industry
Yeocheon NCC, which has been facing a liquidity crisis, will receive an emergency cash injection after a tense standoff between its major shareholders. Hanwha Solutions was the first to officially announce its intention to provide support of around 150 billion KRW. DL Group, which had previously taken a cautious stance citing the need to assess the company's management situation, has ultimately changed its position.
On August 11, DL Group's holding company DL Inc. and DL Chemical each held emergency board meetings and approved a plan to provide 200 billion KRW in support to Yeocheon NCC. DL Chemical will carry out a paid-in capital increase worth 200 billion KRW, and DL Inc. will additionally acquire 823,086 shares of DL Chemical for approximately 177.8 billion KRW.
Yeocheon NCC is a joint venture established in April 1999 by Hanwha Solutions (formerly Hanwha Petrochemical) and DL Chemical (formerly Daelim Industrial), each holding a 50% stake. The company is the third-largest ethylene producer in Korea, with a market share of 14%. However, its performance has sharply deteriorated due to oversupply from China, which became pronounced in the 2020s. Recently, the company halted operations at its third plant in Yeosu, Jeonnam, intensifying restructuring pressures.
Starting August 21, Yeocheon NCC was expected to face a cash shortfall of about 36 billion KRW, with total funding needs reaching 310 billion KRW by the end of the year. While Hanwha Solutions had previously expressed its willingness to provide financial support, DL insisted that a management assessment was needed first, exposing a difference in views between the two sides. Industry observers believe that strong pressure from Hanwha and the urgent cash situation prompted DL's decision.
Although this support has helped Yeocheon NCC overcome its immediate liquidity crisis, many in the industry see this situation as the beginning of a broad restructuring in the petrochemical sector. As it becomes increasingly difficult for companies to survive on their own, discussions about industry reorganization at the government level are expected to accelerate.
DL Chemical plans to thoroughly analyze Yeocheon NCC's management situation through a joint task force team (TFT) with Hanwha Solutions, and then implement practical measures to strengthen competitiveness and ensure sustainable self-reliance.
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