This article was published on March 27, 2025, at 3:27 p.m. on the ChosunBiz MoneyMove website.
Amid concerns over leachate emerging as a stumbling block at Ecobit, which gained attention as one of the largest M&A deals last year, the consortium of IMM Private Equity and IMM Investment, which acquired management rights, has decided to claim insurance against the U.S. insurer Liberty Mutual. The insurance payout limit is up to 200 billion won, which is sufficient to cover the entire loss amount. However, if Liberty Mutual refuses to pay, it is likely that the sellers Kohlberg Kravis Roberts (KKR) will file a court petition to freeze accounts.
According to the investment banking (IB) industry on the 27th, the IMM consortium plans to claim expenses from the insurer related to the leachate level exceeding legal standards at Ecobit's subsidiary Ecobit Green Cheongju, as well as loss of business opportunity expenses. They intend to seek compensation for damages incurred due to being unable to operate during the construction period. The exact claim amount will depend on the progress of the construction, which the industry believes will take several months to assess.
Earlier, in December last year, KKR and Taeyoung Group's holding company TY Holdings sold 100% of Ecobit's equity to the IMM consortium for 2.7 trillion won. However, after the acquisition, the Ecobit subsidiary Ecobit Green Cheongju was subjected to a one-month business suspension and a fine of 5 million won by Cheongju City. This occurred due to concerns that the leachate level exceeded the legal standard of 5 meters, potentially polluting nearby soil or groundwater.
The IMM consortium has conducted thorough due diligence over the past month and has stated that it voluntarily reported the findings to Cheongju City. A consortium official said, “We completed the acquisition of Ecobit on December 12 last year, and during detailed on-site due diligence in January, we discovered defects and reported them to the city at the end of the month,” adding, “Immediately afterward, we are conducting repair work to prevent further leachate generation.”
The industry has positively evaluated the IMM consortium's quick response. An IB industry insider noted, “Buyers do not receive all the information until the sale is completed,” stating, “Identifying the issue and taking action just one month after the acquisition was possible due to their expertise in the field.”
The insurance payout limit from Liberty Mutual is reported to be between 100 billion and 200 billion won, which is 5-10% of the sale price of Ecobit, 2 trillion won. Industry insiders explain that the total of construction expenses and damages due to business interruption will not even reach 100 billion won.
The issue arises if Liberty Mutual refuses to make the insurance payment. If the insurer claims it cannot pay the insurance payout based on the policy terms, responsibility will fall on the sellers, Taeyoung Group and KKR. In this case, the IMM consortium may request a court to impose a seizure on KKR's accounts. However, the IMM side remarked, “(Seizure, etc., is) an option to consider if the insurance payment is not made,” adding, “It's still a distant matter.”