On the 24th, SAMBU Construction applied for corporate rehabilitation proceedings (court receivership) due to its inability to overcome management difficulties. Founded in April 1948, it is a mid-sized construction company that is celebrating its 77th year this year. The company completed its registration in 1955 and, on March 27, 1965, obtained the first domestic civil engineering and architecture business license. In June 1976, it began trading on the stock market through an initial public offering (IPO). Notable projects carried out by the company include the Gyeongin and Gyeongbu expressways, and Seoul Subway Line 1, as well as the Yeongnam thermal power plant.
In 2011, SAMBU Construction applied for court receivership after failing to repay project financing (PF) loans for the development project in Heon-in Village, Naegok-dong, Seoul, but later withdrew the application and began restructuring. In 2015, it again applied for court receivership and entered rehabilitation procedures, and in 2017, after the company was sold, it completed the court receivership.
◆ After the global crisis, deterioration, graduation from court receivership in 2017
The crisis for SAMBU Construction began after the 2008 global financial crisis. In 2010, liabilities were 697.799 billion won, which rose to 1.532859 trillion won the following year. As of the third quarter of last year (end of September), the debt ratio was 838.5%, the highest among the top 100 construction companies in construction capability assessment. A prolonged state of financial instability has been maintained. In 2015, it applied for corporate rehabilitation procedures and graduated in 2017 after two years. An official in the construction industry noted, "Although it has been in operation for a considerable time, it has continued to face crises since the 2008 global financial crisis."
The largest shareholder has also changed continuously. In March 2016, during the corporate rehabilitation procedures, a third-party placement capital increase changed the largest shareholder to Namwoo Tourism (13.1% equity), and in December of the same year, it changed again to Dongbu Life. In September 2017, it changed to DST Robot (now HYULIM Robot), and in September 2018, it changed again to Woojin Investment Private Equity Company from DST Robot. Although DST Robot had stepped down to the second-largest shareholder at that time, it became the largest shareholder again in February 2019.
The acquisition by DYD occurred in February 2023. DYD is a cosmetics brand operator with the largest shareholder Lee Il-jun of Daeyang Industrial Development, which recorded an operating loss of 3.321 billion won in 2023. Cash and cash equivalents were only 574 million won.
◆ Announcement of reconstruction projects in Ukraine after the acquisition by the largest shareholder, stock prices surged
Actions of DYD, the largest shareholder of SAMBU Construction, are also controversial in the financial investment sector. Three months after DYD acquired SAMBU Construction, in May 2023, SAMBU Construction announced that it had signed a memorandum of understanding (MOU) for post-war reconstruction projects with Max Logistics, Ukraine's largest logistics company, along with its affiliated company Well Biotec. It also disclosed that the executives of SAMBU Construction would attend the global reconstruction forum in Ukraine to discuss cooperation.
The forum was attended by then-Minister of Land, Infrastructure and Transport Won Hee-ryong, as well as representatives from Korea, Ukraine, and other countries' political and corporate sectors. At a press conference on May 16, 2023, former Minister Won stated, "While some say that peace talks are far off, the restructuring for post-war order is already underway, and the G7 countries have already completed the partitioning," adding, "If we go in now, we will be late, and this could be our last chance, so we will move diligently," expressing the government's will to participate in the reconstruction project in Ukraine. At that time, Well Biotec promoted its close relationship with the Ukrainian government by releasing a photo with Lee Eung-geun, CEO of SAMBU Construction, Koo Se-hyun, CEO of Well Biotec, Elizaveta Shabchuk, chairwoman of the Vinnytsia Regional Council in Ukraine, and Lee Yang-gu, former ambassador to Ukraine.
Well Biotec is a company where the largest shareholder of DYD, Lee Il-jun, who is also the chairman of Daeyang Industrial Development, held the largest equity through his companies, Daeyang D&I and C&I, and in June 2023 transferred the equity to Onset Link (now The L Link).
The stock price of SAMBU Construction, which had remained in the 1,100 won range, surged from this time, reaching 5,500 won (the intraday high on July 17, 2023). During the stock price surge on June 26, 2023, DYD sold 7.5 million shares of SAMBU Construction at 3,520 won per share, cashing in 2.64 billion won. On the same day that SAMBU Construction applied for corporate rehabilitation proceedings on the 24th, DYD stated, "It has completely concluded construction operations, and does not establish a special relationship with its subsidiary SAMBU Construction, thus claiming no impact resulting from corporate rehabilitation."
◆ Mention of lobbying allegations in a group chat involving SAMBU
The surge in SAMBU Construction’s stock price has also sparked controversy in the political arena. The issue is linked to the former Marine Corps 1st Division Commander Lim Seong-geun. In July 2023, after Private Chae Su-geun of the 1st Marine Division, who was deployed in the search operation for the missing persons from heavy rain in Gyeongbuk Yecheon County, died, there were allegations that former commander Lim lobbied First Lady Kim Keon-hee for a rescue through Lee Jong-ho, the former CEO of Black Pearl Investment. However, this former CEO left a message on May 14, 2023, in a Kakao chat room stating "Check SAMBU tomorrow," which opposition parties like the Democratic Party of Korea claimed meant "Check SAMBU Construction's stock price." May was also the time when former Minister Won mentioned the reconstruction of Ukraine, coinciding with the surge in SAMBU Construction's stock price. However, on the day referenced in the message, May 15, 2023, SAMBU Construction's stock price closed at 1,013 won, down 2.41% from the previous day. Even if the "SAMBU" referred to by the former CEO was SAMBU Construction, there was no surge in the stock price during the mentioned period.
During the National Assembly's inspection of the CIO regarding the last year's event in October, Joo Jin-woo, a member of the People Power Party, related to SAMBU mentioned in a group chat, said, "Conversations should be viewed in context," asserting, "SAMBU pertains to nighttime golfing rounds." Some golf courses receive guests for rounds divided into sections 1 to 3, and checking this is what he meant, not checking SAMBU Construction's stock price.
Lee Jae-myung, leader of the Democratic Party of Korea, also mentioned the surge in SAMBU Construction's stock price at an event held at the Korea Exchange's Seoul office in Yeouido last November. Using his mobile phone, he showed the press the stock price graph for SAMBU Construction, stating, "In a very short period, it rose from the 1,050 to 1,020 won range to 5,500 won, a 5.5-fold increase," and added, "The graph looks very neat, as if it came out of a textbook, but while it was said to be due to the post-war reconstruction project in Ukraine, it is a typical case of stock price manipulation."
Jeon Young-jun, Deputy Minister of the Korea Construction Industry Research Institute's Future Industry Policy Research Office, regarding the deterioration of SAMBU Construction, said, "The continuity of management rights is shaken, and changes in management have impacted the corporation." Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, stated, "As the business worsens, the debt ratio has increased, and once the direction changes, it often leads to prolonged financial instability for several years," adding, "It seems difficult to expect an improvement in SAMBU Construction's financial stability in the short term."