Hyundai Cement, which has been under a debt workout program, could be put up for sale by creditors as early as next month, sources said Thursday.
Creditors of the Korean maker of cement and ready-mixed concrete, led by the state-run Korea Development Bank, plan to seal the deal after the lock-up period on their shares in the company expires at the end of this year.
“Although Hyundai Cement is under a debt workout scheme, its business is almost back on track,” an official at one of the creditors said, asking not to be named.
The company’s affiliate Sungwoo Engineering & Construction and its troubled construction project Pi City -- which had been causing delays in Hyundai Cement’s acquisition -- have found new owners in recent acquisition deals, so the upcoming M&A transaction is unlikely to see another major setback, he added.
The sale process is expected to generate interest from a mix of private equity firms and local cement companies. Potential bidders could include United Asset Management Company, which is co-owned by six of South Korea’s largest banks, and Pine Tree Investment and Management as well as Asia Cement and Hanil Cement.
“Hyundai Cement has been included in our takeover target list since last year. We will participate in the bid when it is put up for sale,” said Nah Jong-sun, a director at UAMCO in a press conference on May 4.
Hyundai Cement’s affiliate Sungwoo E&C had suffered from financial troubles and ended up in court receivership after the distribution complex Pi City project in Seoul, in which the builder had participated as a developer, fell through in 2010.
Hyundai Cement received a huge blow as the construction project was scrapped as it had given over 200 billion won ($172 million) worth of guarantees to bolster the financial credibility of the affiliate.
Harim Group, Korea’s largest poultry processing firm, agreed to buy the Pi City site for 450 billion won in April this year, while Samra Midas Group signed a contract to take over Sungwoo E&C.
M&A hopes for the cement company sent its shares surging to the daily limit for the second day in a row on Thursday.
Hyundai Cement’s shares on Thursday rose 30 percent to 36,200 won, following Wednesday’s surge to the limit.
By Park Han-na (hnpark@heraldcorp.com)