[비즈한국] GS E&C006360 has decided to sell GS Inima, a Spanish water treatment company, for 1.677 trillion won. GS Inima is not only the largest subsidiary of GS E&C in terms of assets but also a highly profitable "cash cow" that generated 123.5 billion won in operating profit last year. Having seen its net borrowings exceed 3 trillion won last year, GS E&C is expected to improve its financial health through this sale.
GS E&C announced on the 22nd that its wholly-owned subsidiary, Global Water Solutions, held a board meeting the previous day and decided to dispose of its entire stake in GS Inima. The disposal value is 1.677 trillion won, which accounts for 9.42% of GS E&C's total assets. The scheduled date for the stock disposal is within 10 business days from the date when the conditions precedent for the Stock Purchase Agreement (SPA), such as government approval, are met or waived, which could be as late as February 21, 2027. GS E&C explained that the reason for the disposal is a "strategic reorganization of the business portfolio and concentration on core businesses."
GS Inima is a water treatment company based in Spain. It engages in businesses that purify water for various uses, including seawater desalination, water supply and sewage treatment, and industrial water treatment. GS E&C acquired GS Inima from a Spanish construction firm in May 2012. Since then, it has stood out in Middle Eastern projects, such as the 2.4 trillion won Oman seawater desalination project in 2020 and the 920 billion won UAE seawater desalination project in 2023. As of last year, its assets stood at 1.8471 trillion won, making it the largest among GS E&C’s subsidiaries.
This sale is expected to significantly improve GS E&C's financial stability. GS E&C's consolidated net borrowings have been on an upward trend, rising from 2.8827 trillion won at the end of 2023 to 3.4824 trillion won at the end of last year and 3.7841 trillion won in March of this year. As of the end of last year, the debt-to-equity ratio reached 250%. The inflow of proceeds from the sale and the subsequent repayment of borrowings are expected to vastly improve financial health. GS E&C recognized GS Inima's net assets (equity) as 814.9 billion won as of the end of June; thus, GS E&C's net assets will increase by the difference between the future sale price and this book value.
However, analysts note that the company's top-line revenue will likely shrink. GS Inima's consolidated revenue last year was 573.6 billion won, with an operating profit of 123.5 billion won. In 2024, revenue and operating profit grew by approximately 16% as construction for projects in Oman and the UAE entered full swing and the performance of concession businesses in Brazil improved. Last year, GS Inima accounted for about 4% of GS E&C's total revenue and about 41% of its new business division. In 2024, while GS E&C's consolidated revenue decreased by 4% to 12.8638 trillion won, its operating profit turned to a surplus of 286 billion won. GS E&C had recorded a large-scale operating loss in 2023 due to the collapse of an underground parking garage at an apartment complex in Geomdan, Incheon.
Kang Kyung-tae, a researcher at Korea Investment & Securities, commented, "This is an event that will dramatically improve the financial health of GS E&C, which has been struggling with net borrowings of 3 trillion won."