Songwon Industrial restructures financials to set foundation for growth

Ulsan-based Songwon Industrial Co., Ltd., a leading producer of specialty chemicals and in particular of plastic antioxidants, is seeking financing to ensure stability and establish a firm foundation for the company’s future growth. The company has concluded an agreement with five lenders in February for a syndicated loan valued at KRW 220 billion.

Songwon will consolidate outstanding loans extended to it by several financial institutions through the single syndicated loan. It will also decrease its proportion of short-term debt by increasing long-term borrowing, thereby providing additional stability and reducing borrowing costs. With this restructuring of finances, Songwon reaches a further milestone on its expansion and is not only adapting its finances to past achievements, but also preparing for further growth plans.

Songwon predicts it will be able to expand available short-term operating capital with RCF worth KRW 50 billion out of KRW 220 billion syndicated loan and by simultaneously reducing financial costs and improving its ability to repay interest with an approximate one percent decrease in annual interest charges.

Reflecting the strong and continued growth in global demand for antioxidants, Songwon Industrial Co., Ltd. constructed in 2007 what was then to become the world’s largest fully back-integrated antioxidant factory at its plant in Maeam, Ulsan, which is located on the southern tip of South Korea. Following that the company actively continued to invest to improve competitiveness and expand its business through, among other activities, the back integration in Maeam into the production of high-purity isobutylene in June 2009, a new antioxidant 1076 plant, the acquisition in December 2011 of Additives Technology Greiz GmbH, one of the leading European manufacturers of OPS and the establishment of the JV Songwon Baifu Chemicals (Tangshan) Co., Ltd. in August 2012 with China’s Tangshan Baifu Chemical Co., Ltd., one of the global leading producer of Thioesters.

With this restructuring of finances, Songwon reaches a further milestone on its expansion and is not only adapting its finances to past achievements, but also preparing for further expansion. In addition to the two above mentioned lead banks, Busan Bank, Standard Chartered Bank and Hana Bank, have also expressed their confidence in the company’s plan by taking part in the syndicated loan facility.

To provide bondholders, institutional investors and other stakeholders with adequate information and to let them follow our expansion closely, Songwon will use active investor outreach to enhance understanding for our business.

Regarding these plans CEO Jongho Park said, “With the goal of becoming a leading global Specialty Chemicals producer and the supplier of choice in the Polymer Stabilizers business, through consistent expansion and improvement of our facilities and of our global business network, we tripled our sales performance from KRW 230 billion in 2007 to KRW 680 billion in 2012. With this financial restructuring, we will be able to secure stability for our global operations and foster future growth.”