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'A Breath of Relief for Liquidity Crisis?' Samwhan Corp. Sells Deokso Zone 1 Site for 130 Billion Won

[비즈한국] It has been confirmed that Samwhan Corp.001470, which is facing a liquidity crisis, recently sold its site for the Deokso Zone 1 urban development project in Namyangju, Gyeonggi-do, for 130 billion won. As South Korea's first construction firm, Samwhan Corp. has recently been struggling with a liquidity crisis due to worsening business performance, leading to unpaid wages for employees and outstanding construction costs for subcontractors. Attention is now focused on whether this asset sale will help put out the immediate fire of its liquidity crisis.

According to industry sources, Samwhan Corp. sold the Deokso Zone 1 urban development site in Deokso-ri, Wabu-eup, Namyangju, Gyeonggi-do, for a total of 130 billion won on the 27th of last month. The buyer is reported to be the real estate developer HMG and its affiliates. The site, which covers a total of 65,000 square meters, was acquired by Samwhan Corp. and its affiliates between 2020 and 2021 for the purpose of urban development. The acquisition cost at the time was reportedly around 127.6 billion won.

The sale process for the site faced some turbulence. When the company's liquidity crisis emerged, Samwhan Corp. signed a contract in April of last year to sell the Deokso Zone 1 site to 'O-Heart Ra-here General Private Investment Trust No. 1' for 130 billion won. However, the two sides mutually agreed to terminate the contract shortly thereafter. It is reported that after that deal fell through, Samwhan Corp. held negotiations with multiple potential buyers until the contract was signed last month.

Samwhan Corp. is currently suffering from financial difficulties. According to its business reports, the company shifted to an operating deficit in 2020 with a loss of 7.8 billion won, followed by operating losses of 4.4 billion won in 2021, 80.8 billion won in 2022, and 78.2 billion won in 2023. The cumulative operating loss as of the third quarter of last year stood at 67.8 billion won, and it is projected that the annual deficit will hit a record high. The company's accumulated deficit stands at 288.1 billion won, and short-term borrowings maturing in the first half of this year reach 171.2 billion won. In August, the company received a disclaimer of opinion from its external auditor during the first-half audit.

Samwhan Corp. is the nation's first construction business operator. Established in April 1948, it became the first domestic company to receive a civil engineering and construction business license in March 1965. Since then, it has carried out major civil engineering projects such as the Gyeongin and Gyeongbu expressways and Seoul Subway Line 1, as well as housing and construction projects centered around its own housing brand, 'Renaissance.' While it ranked within the top 10 in construction capacity in the 1970s, it has now fallen to 71st. Currently, due to financial distress, the company is in a position where it cannot pay employee wages or construction costs to its subcontractors.

The largest shareholder of Samwhan Corp. is the cosmetics manufacturer DYD219550. Previously, after entering court receivership due to management insolvency in 2015, Samwhan Corp. was sold to a Hyulim Robot090710 consortium in 2017. DYD acquired management rights in February 2023 by purchasing an 8.85% stake from existing shareholders for 70 billion won. At the time, with equity of only 3.4 billion won, the acquisition was often described as "a shrimp swallowing a whale." DYD's stake increased to 11.49% in April last year through a paid-in capital increase, but it has since decreased to 3.48% due to consecutive market sales in August of last year.

A Samwhan Corp. official stated, "We are currently short-staffed and are not in a position to respond to the media. There is nothing particular to share." An official from HMG said, "While the purchase of the land in the area is complete, the timeline for the acquisition was tight, so specific business plans have not yet been finalized."