This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:31 p.m. on May 27, 2026.
Private credit fund (PCF) manager VIG Alternative Credit (VAC) has stepped in as a relief pitcher for KODACO, an auto parts maker undergoing rehabilitation. Along with private equity fund (PEF) manager Korea Investment & Securities Co. Private Equity (Hantu PE), it decided on a 50 billion won emergency debtor-in-possession (DIP) loan.
According to the investment banking (IB) industry on the 27th, VAC and Hantu PE recently signed a DIP loan agreement worth 50 billion won with KODACO. As part of support for KODACO's debt repayment funds, VAC took the Cheonan and Anseong plants as collateral. The lending rate was set at the low 10% range per year.
KODACO, a specialist corporations that manufactures automotive aluminum parts such as engine, transmission, and HVAC components, was founded in 1997. As a second-tier partner of Hyundai Motor Group, it once posted annual sales of 300 billion won and about 10 billion won in operating profit, but it entered rehabilitation in Sep. 2023.
The crisis stemmed from overseas expansion. In step with Kia's push into North America, it set up a local subsidiary in Mexico and sought to leap to a first-tier partner, but the U.S. Trump administration's tariff policy and other factors combined to rapidly worsen the company's situation. It also posted a loss of 67.3 billion won in 2023.
VAC is understood to have concluded that much of KODACO's debt has been resolved and business stability secured since rehabilitation proceedings began in Sep. 2023. In particular, after debt-for-equity swaps and other steps, Korea Development Bank (KDB) (22.28% equity stake) became the largest shareholder, and the Mexico subsidiary was sold.
The priority repayment feature of DIP loans also factored into VAC's investment decision. A DIP loan is capital newly raised from outside so that corporations in rehabilitation can continue operations and carry out their rehabilitation plan, and with court approval it has priority over existing claims.
Results are improving. KODACO posted consolidated sales of 58.6 billion won and operating profit of 600 million won in the first quarter of this year. With the Mexico unit gone, it is generating profit from the domestic business alone, and its core aluminum die-casting business is in a structural growth phase on rising demand for EV lightweighting.
In the industry, VAC is being assessed as pursuing aggressive investments under an opportunistic strategy. The opportunistic strategy has a hybrid nature between equity investment and lending, seeking a high mid-to-late-10% return while securing principal protection.
VAC, the credit arm of VIG Partners, committed about half the capital roughly five months after closing a 300 billion won blind fund at the end of last year.
Earlier, it acquired 60 billion won in bonds with warrants (BW) issued by the proptech corporations "ZIGBANG CO.," and later invested an additional 60 billion won in a lease-type dormitory operating corporations. All three investments, including KODACO, are said to have secured downside protection in the form of loans.
An IB industry official said, "Once rehabilitation ends, KODACO will convert to a normal corporations, and refinancing at interest rates in the 3% to 4% range with banks will become possible," adding, "VAC and Hantu PE plan to recover their investment through a shift to institutional financing after KODACO graduates from rehabilitation."