Shinsegae E&C issues $150 mn bond to calm liquidity concerns

South Korea’s Shinsegae Engineering & Construction Co. (Shinsegae E&C) said on Friday it has raised 200 billion won ($150 million) through new bond issues, calming market concerns about its liquidity shortage.

Of the newly issued bonds, 140 billion won worth of notes was sold to financial institutions and the remaining 60 billion won was placed with its affiliate Shinsegae Information & Communication Inc., according to its regulatory filing.

Grappling with heavy debts maturing in the coming months, South Korean builders are scrambling to roll over debts and receive fresh capital from affiliated companies.

In November last year, Shinsegae E&C decided to absorb Shinsegae Youngrangho Resort Inc., a subsidiary of E-Mart Inc., the country’s leading supermarket chain. The acquisition will generate 65 billion won ($49 million) in new cash for Shinsegae E&C.

Including the cash to be injected next month, the country’s 32nd-largest builder is expected to secure a total of 265 billion won in fresh capital.

The money could be used to repay some 200 billion won of debts, for which it has guaranteed the payment, maturing by the end of June of this year.

It has been in discussions with creditors to roll over some of the debts borrowed against construction projects.

Shinsegae E&C has expanded into residential and mixed-use building markets with the launch of its apartment brand Villiv in 2018.

However, rising interest rates and housing oversupply particularly in the city of Daegu, where it had aggressively built apartment houses, have taken a heavy toll on the company.

Its debt-to-equity ratio stood at 467% as of the end of September 2023, similar to Taeyoung Engineering & Construction Co.'s 478%.

Last week, Taeyoung won its creditors' approval for a debt workout, becoming the first Korean builder in a debt rescheduling program in a decade after Ssangyong Engineering & Construction Co.

A Shinsegae Group official said the group is monitoring the construction arm’s liquidity conditions and reviewing various support measures for the unit, including financial support, if needed.

Write to In-Hyeok Lee at twopeople@hankyung.com
 

Yeonhee Kim edited this article.