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S Korean PE Hahn & Co to acquire 71% in SK Shipping for $1.32b

South Korean private equity firm Hahn & Co will take a 71 per cent stake in SK Shipping as its parent firm, conglomerate SK Group, has agreed to give up its controlling interest, local media reported cited an announcement by SK Group. Accordingly, Hahn & Co will own the majority interest through the issuance of KRW1.5 trillion ($1.32 billion) of new SK Shipping shares.

While SK Group will not sell any of its shares in the shipping subsidiary, the issuance will shrink its interest to 16 per cent from the current 57 per cent. Other shareholders in SK Shipping include private equity investors who joined the firm through an earlier restructuring in April 2017. Proceeds of the sale will be used to pay off most of SK Shipping’s debt, improving its debt ratio from 2,400 per cent to 300 per cent, according to media reports.

Its total debt is estimated at KRW4.69 trillion. SK Shipping incurred a KRW19.7 billion loss in the first half of 2018 due to weak tanker rates. It was still a profitable business in the first half of 2017 with a KRW4 billion profit. Meanwhile, SK Shipping remains the primary transport arm of the group, supporting the operations of its affiliates, SK Energy and SK Gas.

SK Shipping reportedly said that it will continue to provide stable transportation services to SK Group. Prior to the sale and purchase agreement, Hahn & Co owned H-Line Shipping, a bulk cargo transportation services provider.
Source: DealStreet Asia

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