Taekwang Industrial announced on the 1st that it plans to invest trillions of won in the cosmetics, energy, and real estate development sectors. This aims to restructure its business in light of the downturn in its core industries of petrochemicals and textiles.
Taekwang Industrial has set a roadmap to invest a total of approximately 1.5 trillion won from this year to next year. If the investment plan is implemented as scheduled, it will execute about 1 trillion won by the end of the year.
In particular, it plans to allocate a significant portion of its funds to the acquisition and establishment of corporations related to cosmetics, energy, and real estate development, where it is seeking to make new entries. It is already reported to have entered the bidding process for the acquisition of Aekyung Industrial and has been shortlisted as a qualified candidate.
Taekwang Industrial is seeking external funding as it cannot cover investment costs with existing reserves. As of the end of last month, the company held cash equivalents of 1.9 trillion won, but the actual funds available for operation are estimated to be less than 1 trillion won.
An immediate investment of over 500 billion won is needed for the petrochemical and textile sectors, and it is also required to hold 560 billion won in reserve operating funds for 3.5 months in anticipation of worsening business conditions. Additionally, significant funds will be required for facility dismantling and workforce redeployment as the second petrochemical plant and low melt fiber (LMF) plant have ceased operations.
Taekwang Industrial plans to allocate 318.6 billion won raised through the issuance of exchange convertible bonds next month to its business restructuring efforts. As the petrochemical recession continues, the company's poor performance is worsening. Revenue decreased from 2.6066 trillion won in 2022 to 2.1218 trillion won last year, marking three consecutive years of losses.
To enter new businesses, Taekwang Industrial will amend its articles of incorporation at a special shareholders' meeting on the 31st to expand its business purposes. The added business purposes will include ▲ manufacturing and trading of cosmetics ▲ energy-related businesses ▲ real estate development ▲ development and operation of lodging facilities such as hotels and resorts ▲ investment in real estate investment trusts (REITs) and project financing investment companies (PFV) ▲ finance-related industries based on blockchain, among others.
A representative from Taekwang Industrial noted, "While it is important to reflect government policies by retiring company shares to increase stock value, now is the time to secure survival strategies through active investment and business restructuring," adding, "Securing investment through the issuance of exchange convertible bonds is an essential measure for the company's survival and job security for employees."