Ecorbit’s R&D center rendering image (Courtesy of Ecorbit)
A consortium of IMM Private Equity and IMM Investment has moved a step closer to owning South Korea’s No. 1 landfill company Ecorbit Co. after offering 2.1 trillion won ($1.6 billion).
According to sources in the Korean investment banking industry on Monday, TY Holdings Co., Taeyoung Group’s holding company, has notified the IMM consortium as the sole preferred bidder for Ecorbit’s full stake up for sale.
The two parties are expected to sign a binding contract for the stake sale after due diligence.
Korea’s leading investment firm union beat three other contenders – Carlyle Group, Hong Kong-based Keppel Corp. and Gaw Capital Partners – after offering about 2.1 trillion won for Ecorbit’s 100% stake based on a corporate value of 2.7 trillion won, including Ecorbit’s liabilities.
As the IMM consortium is expected to place Korea’s largest landfill company under its wings, the latter’s major shareholder Taeyoung Group with a 50% stake is also projected to expedite its restructuring process with the proceeds from the stake sale.
TY Holdings and leading global investment firm KKR & Co. Inc. own 50% of Ecorbit, each.
Taeyoung’s holding company and the global investment firm agreed to sell the entire stake as part of the cash-strapped Taeyoung Group’s workout plan.
TAEYOUNG’S ACCELERATED DEBT WORKOUT
Taeyoung filed for a debt restructuring in December last year to revive the group saddled with 5.6 trillion won in debt and loans it has guaranteed.
Taeyoung has been seeking to sell its assets, including Ecorbit, to normalize its business after its core construction unit Taeyoung Engineering & Construction Co. teetered on the brink of bankruptcy late last year due to its inability to pay back its huge debts amid the prolonged the construction industry slowdown.
If the sale of Ecorbit is completed as planned, Taeyoung will be able to repay 400 billion won to KKR, which TY Holdings borrowed at an interest rate of 13% in January.
After KKR takes 1.05 trillion won for 50% of Ecorbit’s full stake and receives 400 billion won from TY Holdings, Taeyoung is expected to have the remaining 400 billion won to 500 billion won from the sale of Ecorbit.
Earlier this month, the group also agreed to sell its headquarters building in Yeouido, Seoul’s main financial district, for about 250 billion won, while it is speeding up the sale of its leisure business BlueOne.
FIERCE COMPETITION FOR ECORBIT
Ecorbit’s landfill sites (Courtesy of Ecorbit)
As the landfill industry started showing signs of slowdown earlier this year, Ecorbit’s sale was forecast to hit bumps.
But competition for Korea’s No. 1 landfill company heated up thanks to the company’s healthy business backed by steady cash flow.
Its earnings before interest, taxes, depreciation and amortization (EBITDA) is forecast to reach about 250 billion won for 2024.
Ecorbit’s stake sale price is 10 times its EBITDA.
The outlook for Ecorbit’s business is also rosy on growing market expectations for the landfill industry as mounting waste and the industry’s high entry barriers brighten the market outlook.
By Jun-Ho Cha and Jong-Kwan Park
chacha@hankyung.com
Sookyung Seo edited this article.
