DL Chemical held an emergency board meeting on the 11th and announced that it approved a capital increase of about 200 billion won. DL Co., the parent company of DL Chemical, also held a board meeting and approved its participation in a capital increase of 177.8 billion won for DL Chemical. The purpose is to inject funds into Yeochun NCC, which is facing a bankruptcy crisis.
DL Chemical announced that it resolved a capital increase of 199.99 billion won at the board meeting on that day. The total number of newly issued shares is 925,895, with a price of 216,007 won per share. DL Co. plans to acquire 823,086 new shares for 177.79 billion won in cash.
DL noted that as the major shareholder of Yeochun NCC, it plans to practice responsible management and do its utmost to ensure the proper normalization and competitiveness of Yeochun NCC. DL Chemical plans to analyze the management situation of Yeochun NCC after thoroughly examining it through a task force jointly operated with Hanwha, and then derive and implement practical measures to enhance competitiveness and secure proper self-sustainability.
Yeochun NCC is a joint venture established in April 1999 by Hanwha Group and DL Group. Hanwha Solutions (formerly Hanwha Petrochemical) and DL Chemical (formerly Daelim Construction) each hold 50% equity. The two companies decided to integrate and operate their respective NCCs amid the consolidation and expansion efforts in the petrochemical industry due to the fallout from the foreign exchange crisis (IMF).
The two companies expressed differing views regarding securing additional funds to repay the 310 billion won borrowing fund for Yeochun NCC, which is due on the 21st. Hanwha Solutions decided to inject an additional 150 billion won, but DL Chemical had expressed opposition until last week. However, the approval of the capital increase by DL on that day opened the way to support Yeochun NCC.
However, DL stated that "analyzing the root causes of Yeochun NCC's insolvency issues and preparing solutions is the most urgent problem," adding that "a responsible shareholder should be able to present solutions rather than simply leaving the company's insolvency issues as stopgap measures. Issuing capital without any explanation or cause analysis does not contribute at all to the normalization of Yeochun NCC. Recklessly injecting funds is precisely what neglects responsible management."
He continued, "Repeatedly issuing capital without any cause analysis, as claimed by Hanwha, is harmful to the competitiveness of Yeochun NCC and constitutes an irresponsible moral hazard as a co-major shareholder, which could lead to breach of trust issues. We need to understand why cash flow has worsened, and if it is due to a decline in sales, we should have concrete details on how viable our self-help measures are and how much support shareholders need to provide when executing those measures to make informed decisions on reasonable support."