[비즈한국] Attention is focused on OCI Holdings010060's strategy to secure a stake in Bukwang Pharm003000. This is because, under the Monopoly Regulation and Fair Trade Act (Fair Trade Act), holding companies are required to hold at least a 30% stake in their listed subsidiaries. As time is running out, the prevailing outlook is that they will seek a grace period for fulfilling this share acquisition requirement.
According to industry sources on the 10th, OCI Holdings is expected to apply to the Fair Trade Commission (KFTC) for an extension of the adjustment period to further secure its stake in Bukwang Pharm. OCI Holdings transitioned into a holding company in May 2023 and is required to secure a 30% stake in Bukwang Pharm by the 22nd of this month. As a holding company, OCI Holdings must hold at least 30% of its listed subsidiary, Bukwang Pharm, in accordance with Article 18, Paragraph 2, Subparagraph 2 of the Fair Trade Act. Failure to achieve this could result in corrective orders, such as the disposal of all or part of its shares based on Article 37, Paragraph 1, or the imposition of fines under Article 38, Paragraph 3, Subparagraph 2.
In response, Article 18, Paragraph 6 of the Fair Trade Act stipulates that 'if it is difficult to reduce liabilities or acquire/dispose of shares due to changes in economic conditions such as sudden fluctuations in stock prices, stock disposal prohibition agreements, significant losses in business, or other reasons, a two-year extension may be granted upon approval by the Fair Trade Commission.' Therefore, it is the general consensus in the industry that OCI Holdings will utilize this provision.
Through a rights offering for existing shareholders conducted by Bukwang Pharm last July, OCI Holdings increased its stake from 11.32% to 17.11%. However, it is still
short by 12.89%.
With only two weeks remaining, it does not appear easy for OCI Holdings to secure the stake in Bukwang Pharm. The total trading volume of Bukwang Pharm shares over the last 10 business days (August 27 to September 9) was 3,096,438 shares. To exceed a 30% stake without issuing new shares, OCI Holdings would need 29,599,402 shares, and even if it bought all the volume traded on the market, it could take more than three months. A public tender offer proposing a purchase price higher than the market price also requires at least 20 days, making it difficult to secure the stake by the 22nd of this month.
The card of a third-party allotted paid-in capital increase, which could secure the stake in a relatively short period, remains, but the industry does not believe there is a high possibility of OCI Holdings considering this. This is because, based on Bukwang Pharm's closing price of 3,500 won on the 5th, it would require at least 44.5 billion won.
The OCI Group, which focuses on energy and chemicals, is a large conglomerate that ranked 42nd in the list of business groups subject to disclosure announced by the KFTC last May, with assets of 13.776 trillion won. As of last June, OCI Holdings held current assets of 4.0783 trillion won, including 781.2 billion won in cash and cash equivalents on a consolidated basis. However, as uncertainties in the solar power business grow due to the tariff and trade policies of U.S. President Donald Trump, the profitability of the entire group is deteriorating. Under these circumstances, analyses suggest it will not be
easy for the company to readily step up to secure the stake in Bukwang Pharm.
OCI Holdings is building a 2GW solar cell factory in Texas, USA, with an investment of 265 million dollars (384 billion won), aiming for operation in the first quarter of next year. By selling off a total of three solar power projects with a capacity of 480MW this year, the company has been raising expectations for a rebound in the solar business, which had been sluggish for the past two to three years. However, recently, President Trump criticized wind and solar power as a "scam of the century" and stated that he would not approve any new projects, leading to renewed high risks for the solar business.
With market uncertainties growing, OCI Terracyon, a subsidiary producing polysilicon for solar power, has completely suspended factory operations since last May. This is due to the contraction of demand in the downstream industry, such as client companies suspending operations. OCI Holdings also plans to secure future growth engines by expanding OCI Terracyon's business portfolio to ECH (epichlorohydrin), a lightweight material for electric vehicles and wind power, and polysilicon for semiconductors, so it needs to prepare for large-scale investments in the future.
In March 2022, OCI Holdings invested 146.1 billion won to acquire an 11.8% stake in Bukwang Pharm, becoming its largest shareholder. Although Bukwang Pharm recorded an operating profit for the first time in three years last year, its annual revenue of 160.1 billion won and operating profit of 1.6 billion won are not significant in scale or proportion compared to other affiliates of the OCI Group. The stock price has also fallen by more than 70% compared to the closing price of 11,800 won on March 8, 2022, so for the OCI Group, Bukwang Pharm is bound to be a "sore finger."
An official from OCI Holdings said, "Nothing has been decided yet regarding the plan to acquire the stake in Bukwang Pharm or the application for a grace period from the Fair Trade Commission," adding, "We will announce it through a public disclosure as soon as it is decided."