[비즈한국] It has been confirmed that automotive parts manufacturer Anjeon Industrial took out a loan using its factory, which had been destroyed by fire, as collateral. Previously, in March of this year, a fire broke out at Anjeon Industrial’s Plant 1, located in Munpyeong-dong, Daedeok-gu, Daejeon, resulting in 74 casualties (14 deaths and 60 injuries). Following the fire, operations at Plant 1 were completely halted, and the demolition is currently nearly complete. It appears that Anjeon Industrial needed funds for victim support and corporate normalization.
It was confirmed that on July 1, Anjeon Industrial received a loan from a commercial bank using Plant 1 as collateral. According to the real estate register for the factory, a mortgage with a maximum bond amount of 5.64 billion KRW was established. The debtor is Anjeon Industrial, and the mortgagee is Bank A. Considering that the maximum bond amount is typically set at 110–120% of the loan amount, it is estimated that Anjeon Industrial borrowed approximately 5 billion KRW. Given that the company’s total debt was 36 billion KRW at the end of last year, this is a significant amount.
Demolition work on the mortgaged Plant 1 began in April of this year. By July, when the loan was executed, the demolition work had already been partially completed. When Bizhankook visited on July 31, the east building had already been completely demolished. The area where the factory once stood was fenced off, preventing public access.
Although the main building remained standing, it was locked and showed no signs of activity. A worker at a nearby factory stated, "People come and go occasionally, but they mostly appeared to be demolition workers." Bizhankook attempted to contact Anjeon Industrial multiple times for comment, but received no response.
Why did Anjeon Industrial take out the loan? First, the possibility of using it to support victims and their bereaved families is being raised. After the fire, Anjeon Industrial CEO Son Joo-hwan faced heavy criticism after it was revealed that he made insulting remarks to victims. If support for the victims proves to be insufficient as well, the criticism is likely to intensify further.
Funds also appear necessary for company normalization. Since the fire, production of Hyundai Motor’s Genesis models has faced disruptions. Hyundai Motor explained that the supply chain issues caused by the Anjeon Industrial fire negatively impacted its second-quarter performance this year. In fact, Hyundai Motor's operating profit decreased by 20.84% from 3.6016 trillion KRW in the second quarter of last year to 2.8509 trillion KRW in the second quarter of this year.
A Hyundai Motor official stated during the Q2 earnings conference call on July 23, "Production disruptions occurred for major volume models and the Genesis brand due to the fire at the parts supplier that provides engine valves," adding, "We completed the development and application of alternative engine valves in May."
Hyundai Motor is currently sourcing the relevant parts from other suppliers instead of Anjeon Industrial. If Hyundai Motor increases its transaction volume with other suppliers, it will be a major blow to Anjeon Industrial, which is known to be heavily dependent on Hyundai Motor Group.
Anjeon Industrial might also use the loan to strengthen its product competitiveness. The company also operates Plant 2 in Daehwa-dong, Daedeok-gu, to manufacture parts. When Bizhankook visited Plant 2, unlike Plant 1, people were seen moving about and working normally. However, it is known that the production volume at Plant 2 is significantly lower than that of Plant 1.
The automotive industry generally expects that Anjeon Industrial will focus on supporting victims and resolving the situation for the time being. CEO Son Joo-hwan previously issued a statement saying, "We will fulfill our responsibilities to ensure that necessary support and recovery take place so that it provides practical help to the victims and their bereaved families."
Regarding the fire, the police booked CEO Son and key management staff without detention in April on charges of professional negligence resulting in death. In June, they conducted a joint investigation with related agencies. The results have not yet been announced.