As Yeochun NCC faces a default crisis due to a conflict over operational funding with Hanwha Solutions and DL Chemical, which each hold a 50% equity stake, the price of Yeochun NCC's corporate bonds has also plunged.
According to the Korea Exchange, at 11:10 a.m. on the 11th, the corporate bond Yeochun NCC78 was traded at 9,000 won. This marked a decrease of 1,070.4 won from the previous trading day. The bond was issued by Yeochun NCC in March 2024, with a total volume of 150 billion won and a repayment date set for March 2026.
The corporate bonds Yeochun NCC84-1 and Yeochun NCC84-2 were also traded at 8,290 won and 8,000 won, respectively, at the same time. They dropped by 1,660 won and 1,890 won from the previous trading day, respectively.
The two corporate bonds were issued in October of last year in amounts of 70 billion won and 30 billion won, respectively. The maturity dates are October 2026 for Yeochun NCC84-1 and October 2027 for Yeochun NCC84-2.
The Yeochun NCC corporate bonds had been traded around 10,000 won, as Yeochun NCC was rated A- as a stable bond. However, as the possibility of default was raised, the price of the corporate bonds plummeted on that day, causing corporate bond yields to soar into double digits. It even dropped to the 7,000 won range during the day.
Founded in 1999, Yeochun NCC is jointly owned 50% by Hanwha Solutions and DL Chemical. Yeochun NCC has been reaching out to Hanwha Solutions and DL Chemical due to the downturn in the petrochemical industry. The two companies also injected 100 billion won each into Yeochun NCC last March.
However, as Yeochun NCC requests additional funds, the responses of Hanwha Solutions and DL Chemical are diverging. Yeochun NCC has asked both companies for a total of 300 billion won in additional funding, with each company being requested to contribute 150 billion won. While Hanwha Solutions has decided to support the additional funding, DL Chemical is showing reluctance. DL Chemical is also leaving open the possibility of a workout for Yeochun NCC.
The Yeochun NCC board is composed of a total of six members, three each from Hanwha and DL. Both sides must agree to inject funds into the company. If DL Chemical continues to oppose funding, the plans for additional funding will be derailed. It is reported that Yeochun NCC will be at risk of default if it fails to secure additional funds by the 21st.