Hanwha Solutions (formerly Hanwha Petrochemical) and DL Chemical (formerly Daelim Construction), which own equal equity stakes in Yeochun NCC, are in conflict over a plan to inject 300 billion won in operating funds. Hanwha Solutions plans to invest 150 billion won in Yeochun NCC, while DL Chemical is leaving the possibility of a workout open without injecting funds. If Yeochun NCC fails to secure approximately 310 billion won by the 21st of this month, it will face debt default.
According to industry sources on the 8th, Yeochun NCC is expected to face a funding shortfall of approximately 310 billion won by the end of this month due to losses and deteriorating financial conditions arising from a downturn in the petrochemical market. The company is in a difficult situation to secure funds using its own creditworthiness through corporate bond issuance, and if it cannot prevent its liability by the 21st of this month, it will enter a state of default.
Established in 1999, Yeochun NCC is jointly owned 50% each by Hanwha Solutions and DL Chemical. The two companies injected 100 billion won each into Yeochun NCC last March. They projected that if 200 billion won is injected, there would be no cash flow problems until the end of the year.
However, as the petrochemical market worsened, Yeochun NCC requested an additional 300 billion won in funding from its shareholders in June. Hanwha Solutions presented a funding proposal of 150 billion won after obtaining board approval in July and also requested support from DL Chemical.
Yeochun NCC has a total of six directors, with three appointed by Hanwha and three by DL. Therefore, both sides need to agree in order to inject funds into the company. If DL Chemical continues to oppose financial support, it will also be impossible for Hanwha Solutions to lend 150 billion won alone.
DL Chemical has taken the position that it cannot provide support unless operational issues are resolved. A DL Group official noted, "It is crucial to understand fundamentally what reasons are causing liquidity difficulties and what the exact management situation is. We need to examine how much and why the shareholders should help, and we are looking into it."
Hanwha Solutions believes that DL Chemical is attempting to force a workout to intentionally default. A Hanwha Group official stated, "I understand that Lee Hae-wook, chairman of DL Group, has strongly asserted that a workout is the only solution. Considering the impact on Yeochun NCC's partners and the local community, it is right to fulfill our responsibilities as shareholders."