Private equity fund (PEF) manager JC Partners has completed a recapitalization (recap) of Hwangjo, a zinc oxide producer.
According to the investment banking (IB) industry on the 30th, JC Partners recently completed a 30 billion won recap of Hwangjo. It borrowed 30 billion won from domestic financial institutions to pay dividends to fund investors. It plans to repay principal and interest on the loan with the dividends afterward.
When JC Partners was reviewing the acquisition in 2021, Hwangjo was burdened with excessive financial debt, so it raised funds solely with equity, without acquisition financing.
Since then, JC Partners is seen to have succeeded in improving the financial structure by first repaying Hwangjo's existing high-interest borrowing fund and sharply lowering the liability ratio. It also completed Capex needed to expand new production facilities by using Hwangjo's operating cash flow.
This recap is meaningful in that, after completing a series of efforts to enhance corporate value—such as improving Hwangjo's financial structure and increasing production capacity—the company subsequently borrowed external funds to readjust its capital structure.
Earlier, Hwangjo paid a total of 13 billion won in dividends in two rounds in Dec. last year and Jun. this year. Through this recap, JC Partners will have recovered a cumulative 43 billion won. The original investment at the time of acquisition was 32 billion won.
Meanwhile, Hwangjo recorded 34.9 billion won in revenue and 10.7 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) last year. The liability ratio was 56%, down sharply from 168% right before JC Partners acquired the company. The second production line, newly built last year, is in operation, and the company plans to accelerate top-line growth through it.