[THE INVESTOR] HAAN, an electronics firm well known for its steam vacuum cleaner, had its capital completely impaired last year while having posted an operating loss for two years in a row, according to news reports.
 
The electronics firm, which had grown rapidly on the back of the popularity of its home appliances for years, was inundated with 30.9 billion won (US$26.94 million) of debt last year, which surpassed 10.7 billion won of the company’s total assets.

As the total paid-in capital of the firm also ran out, HAAN was suffering from capital erosion, according to the news reports.

Capital erosion occurs when total debt exceeds the combined amount of a firm’s assets and paid-in capital.

A company with capital erosion is subject to delisting from stock markets. HAAN is an unlisted firm.

The company logged an average of 70 billion won in revenue from 2011 to 2014, but the figure almost halved last year to 39.1 billion won. The exact cause of the sluggish sales has not been known yet, but competitive market conditions are said to be an attributable factor.

The company, which posted an operating loss in 2014 for the first time, saw its operating loss increase from 7.1 billion won in 2014 to 19.5 billion won in 2015.

By Kim Young-won (wone0102@heraldcorp.com)