Hahn & Company’s acquisition financing of SK Chemicals’ biofuel business is attracting market interest due to a lack of deals during the COVID-19 pandemic.
Hahn & Co. has hired NH Investment & Securities to arrange the acquisition financing, sources said on Monday.
The 230 billion-won ($188 million) acquisition financing with five-year maturity consists of a 200 billion-won senior term loan, excluding a 50 billion-won revolving credit facility at an interest rate of 4.3 percent and a 30 billion-won mezzanine term loan at an interest rate of 6.5 percent.
Market participants are paying attention to the deal as an interest rate of at least 4 percent is guaranteed. Multiple institutional investors, including pension funds, mutual aids and insurance companies, are expected to participate in a possible sell-down process.
Strong interest is also attributable to a lack of deals due to the COVID-19 pandemic. “Considering Hahn & Co.’s recent activities, the PE firm is likely to carry out recapitalization or refinancing before the latest acquisition financing matures,” said a pension fund official. “[Institutional investors] are likely to participate in a sell-down process amid an absence of acquisition financing deals in the market lately.” The source added that their participation in the first transaction as a lender could lead to new opportunities in the future.
Hahn & Co. recently carried out its third recapitalization on its portfolio company Ssangyong Cement Industry. The buyout firm financed 780 billion won through acquisition financing when taking over Ssangyong Cement in April 2016. In January 2018 it secured around 1.05 trillion won in the first recapitalization on the cement manufacturer. In February 2019 the buyout firm secured 1.3 trillion won in the second recapitalization on the company.
(By reporters Kim Byung-yoon and Kim Hye-ran)