Buyout firm Hahn & Company has started a marketing campaign to refinance loans used to fund the 2018 acquisition of SK Shipping, aiming to close the deal in March.

Arrangers, Hana Bank, NH Investment & Securities, Samsung Securities, Shinhan Bank, and Shinhan Investment have decided the deal structure and volume and started their marketing efforts, industry sources said on Monday (February 1).

Hahn & Co acquired 79% of SK Shipping from SK Group at the end of 2018, funding the deal through a 1 trillion won ($900 million) rights offering and the acquisition of convertible bonds worth 500 billion won. SK Group’s shareholding fell to a 10% range.

The buyout firm also used acquisition loans worth 1 trillion won. Hahn & Co Tanker Holdings borrowed 550 billion won of this sum, including revolving credit facilities of 50 billion won, and operating company SK Shipping borrowed 450 billion won, including revolving credit facilities of 100 billion won. Shinhan Bank, Shinhan Investment, NH Investment & Securities and Samsung Securities arranged the deal.

Hahn & Co will increase its borrowing through the holding company by 250 billion won with the latest deal, but will benefit from lower interest rates. The existing loans used by the holding company will be lowered from a 6% range to a 5% range and the loans for the operating company will fall from a 5% range to a 4% range.

Proceeds are expected to be used to boost the company’s working capital amid intense competition for new orders among large-sized shipbuilders.

Hahn & Co has focused on boosting the shipping company’s finances for the last two years by reorganizing its business structure and improving profitability.

SK Shipping recorded revenue of 1.68 trillion won and operating income of 164.3 billion won in 2019 on a consolidated basis, according to its audit report. Earnings before interest, tax, depreciation and amortization were 306.2 billion won at the end of 2019, up nearly 100 billion won from 209.6 billion won in 2018.

The company’s debt ratio, which was 2500% at the end of 2017, declined to 590% in 2018 and 570% in 2019. (Reporting by Hee-yeon Han)