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Refers to the credit rating surveillance registration of Korea Zinc, conducted by Korea Ratings |
[Alpha Biz= Reporter Kim Jisun] Korea Ratings placed Korea Zinc's corporate credit rating and its unsecured bond rating under negative review on October 20. As a result, the ratings were revised from AA+ (stable) to AA+ (negative review).
This action follows the withdrawal of Korea Zinc’s capital increase plan, which led to an 18 trillion KRW outflow for a public share repurchase, increasing financial burdens on the company. Despite efforts to reduce the debt, such as selling all of its shares in Hanwha (5.44 million shares) for approximately 1.52 trillion KRW to Hanwha Energy, the impact has been minimal in terms of relieving financial pressures.
Korea Ratings estimates that the company’s net borrowings, which stood at 3.17 trillion KRW at the end of September, will increase to 19.8 trillion KRW, pushing the company’s debt-to-equity ratio from 44.6% to around 73.6%. This will result in an increase in the net debt/EBITDA ratio to 1.7 times, which exceeds the current rating's negative factors.
The significant deterioration of the company’s previously outstanding financial stability, which was characterized by almost no debt, has raised concerns. If the company fails to provide effective solutions or implement them smoothly, it could face a downgrade in its credit rating.
Additionally, Korea Zinc's management situation is under close scrutiny, especially regarding potential additional financial burdens, the stability of management control, dividend policies, and long-term business and investment strategies. These factors will be monitored closely and reflected in the company’s creditworthiness assessment moving forward.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
