Private equity firm KKR has secured debt financing of 300 billion won ($256 million) from three financial institutions as part of its planned acquisition of a minority stake in TSK Corporation. The loans will cover half of the transaction cost.
Taeyoung Engineering & Construction, the parent of TSK Corporation, owns 62.61 percent of the South Korean waste management company. KKR will buy the remaining stakes from the company’s three other shareholders, SK Engineering & Construction, Huvis and SK Discovery, which hold shares of 16.7 percent, 16.52 percent and 4.17 percent respectively.
The financing consists of about 250 billion won in term loans and a 50 billion won revolving credit facility.
Other financial institutions reportedly wanted to provide loans for the acquisition, but only a handful were able to meet KKR’s expectations on the interest rate, according to sources.
The purchase comes after KKR completed the takeover of another South Korean waste company, Eco Green Holdings, for 875 billion won from Anchor Equity Partners in August. The deals are seen as part of a broader strategy by the U.S-based firm to build up its portfolio of infrastructure assets in Asia.
SK Engineering & Construction will end a 10-year partnership with Taeyoung in the industry with the sale of its stake in TSK Corporation, and will soon operate its own waste management business. The company signed a deal to buy environmental services firm EMC Holdings from Affirma Capital for 1 trillion won earlier this month.
It decided to offload the stake in TSK Corporation to KKR to eliminate concerns over antitrust scrutiny. Two other minority shareholders in TSK Corporation exercised their tag-along rights to join the transaction. (Reporting by Hee-yeon Han)