The Korea Development Bank has begun selling its equity in mid-sized steelmaker Hwanyoung Steel Industry, which it came to hold after the 1998 foreign exchange crisis led to the company's bankruptcy.
According to the investment banking (IB) industry on the 21st, the Korea Development Bank is carrying out a valuation to sell its Hwanyoung Steel equity. The bank is the second-largest shareholder with 14.28% equity (1,094,857 shares). The Korea Development Bank plans to select an advisor to determine a fair sale price for the Hwanyoung Steel equity.
Hwanyoung Steel is a subsidiary of the mid-sized steel KISCO Holdings(001940). KISCO Holdings and its specially related parties hold 83.5% equity (6,400,658 shares) in the company
In the over-the-counter market (K-OTC), Hwanyoung Steel's share price is around 26,000 won, which means, on a simple calculation, the value of the Korea Development Bank's equity is about 28.46628 billion won. Hwanyoung Steel is known to pay stable dividends to shareholders. Last year's settlement of account dividend was 1,500 won per share. It has steel production facilities with an annual capacity of 750,000 tons.
Amid a recent slump in the steel industry, Hwanyoung Steel posted an operating loss of 27.3 billion won last year. In 2009, the Korea Development Bank also attempted to sell its Hwanyoung Steel equity but failed because no bidder emerged.
Hwanyoung Steel was hit hard by the 1998 foreign exchange crisis, entered court receivership (now corporate rehabilitation proceedings) that year, and was delisted in 2002. The Korea Development Bank, then the main creditor bank, judged rehabilitation unfeasible and, after a debt-to-equity swap, came to hold its current equity. KISCO later acquired the remaining equity in Hwanyoung Steel and became the largest shareholder. KISCO established the holding company KISCO Holdings and placed KISCO and Hwanyoung Steel under it.