This article was published on April 16, 2025, at 3:11 p.m. on ChosunBiz MoneyMove site.
Koentec, a waste incineration company listed on the KOSDAQ, is expected to begin the process of selling its management rights in June at the earliest. The majority shareholder plans to buy the remaining stocks of minority shareholders at this month's shareholders' meeting and voluntarily delist the company before proceeding with the sale.
The majority shareholder IS Dongseo-E&F Private Equity consortium initially considered a plan to sell Koentec together with another waste company Coreentec and KR Energy for approximately 2 trillion won. However, it is currently reported that they are contemplating the option of selling Koentec separately. In a separate sale, the corporate value is expected to be about 800 billion to 1 trillion won.
According to investment banking (IB) industry sources on the 16th, Koentec plans to hold an extraordinary shareholders' meeting on the 28th to pass a comprehensive stock exchange agenda. The consortium has gathered 86.31% of the equity so far and plans to purchase the remaining equity at 9,000 won per share to voluntarily delist.
The comprehensive stock exchange is subject to a special resolution at the shareholders' meeting (requiring agreement from over 67.7% of attending shareholders), but it is expected to pass without difficulty due to the large stake held by the largest shareholder. Shareholders can exercise their rights to demand share purchases until May 19, and the exchange date is on May 30.
Previously, the consortium acquired 59.29% of Koentec's equity for 420 billion won through a special purpose company (SPC) ENI Holdings in 2020, and increased its stake to 79.52% through a public tender offer last November. They purchased Koentec shares at 9,000 won per share through Black Sapphire Holdings. Since then, they have steadily increased their equity through on-market purchases.
Initially, the consortium considered a plan to sell Koentec along with another portfolio, waste incineration company Coreentec, and solid waste recycling company KR Energy for 2 trillion won. The consortium purchased 100% of Coreentec's equity for 540 billion won in 2022, and acquired 82.11% of KR Energy for 117 billion won the following year in 2023.
The reason the consortium is considering separate sales is that if the three companies are sold together, the combined size would be too large, limiting potential acquirers. In the meantime, the market has seen that if the 2 trillion won combined sale is pursued, potential buyers could be significantly limited to firms like Kohlberg Kravis Roberts (KKR), Carlyle, and EQT. However, pursuing individual sales could lower the entry barriers for potential buyers.
The reason to sell Koentec before Coreentec is that the fund's maturity comes up more quickly. It is known that unless the fund's maturity is extended, Koentec must complete the sale within this year. In contrast, Coreentec has an additional two and a half years. The expected sale price for Coreentec is also projected to be around 1 trillion won, similar to that of Koentec.