South Korea’s Woongjin Energy will soon submit its new reorganization plan to the Seoul Bankruptcy Court after its failed attempt to sell itself earlier this year, sources said.
The photovoltaic business arm of Woongjin Group has until June 3 to file its reorganization plan. As the bankruptcy court has already approved the extension of the deadline four times, the chances of a further delay are slim, according to sources.
The company, which filed for bankruptcy about a year ago, originally sought to sell itself to reorganize its operations. Several foreign potential investors showed interest but ultimately none made an offer. According to an inspection report submitted to the court last fall, the company’s liquidation value was estimated at about 80 billion won ($65 million).
As its sale attempt flopped, the debtor is expected to propose a repayment schedule for its creditors based on the operating cash flow forecast for the next 10 years as part of its reorganization plan. Woongjin Energy’s debt totaled 195.5 billion won, although the amount can be reduced after a debt-for-equity swap upon approval by the court.
“Once Woongjin Energy’s reorganization plan is confirmed, a group of creditors will become the largest shareholder in the company,” an industry insider said.
Woongjin Energy was delisted from the local stock exchange on June 1 after its financial statements were given a disclaimer of audit opinion for two consecutive years. There are chances that a controlling stake in the company may be placed on the market again if its creditors seek to collect their debt through a sale.
Woongjin Energy is considered the starting point of Woongjin Group’s liquidity crunch. It is the country’s last remaining manufacturer of ingots and wafers for solar cells. The company recorded revenue of 165.8 billion won and operating loss of 56 billion won for 2018 and a deteriorated performance in 2019 with 41.8 billion won in revenue and 59.3 billion won in operating loss. (Reporting by Ik-hwan Choi)