Bain Capital, which acted as a white knight for Chairman Choi Yoon-beom in the Korea Zinc management dispute, has completed the process of converting the bridge loan it raised last year into long-term acquisition financing. This refinancing was initiated due to the upcoming maturity of the bridge loan, which has been set for 4 and a half years with an interest rate of 6.3% per year.
On the 25th, according to the investment banking (IB) industry, the special purpose corporation (SPC) Troika Drive Investment established by Bain Capital refinanced approximately 370 billion won of bridge loans under the guidance of Korea Investment & Securities on the 18th.
The existing bridge loan was a short-term borrowing with a maturity of 9 months, with about 370 billion won disbursed in October of last year. The funds raised by Bain Capital through the bridge loan were used in collaboration with Chairman Choi to secure equity in Korea Zinc.
Through this refinancing, Bain Capital's acquisition financing has been restructured into approximately 300 billion won of term loans and 70 billion won of revolving credit facility (RCF). The RCF is a type of overdraft account that allows for withdrawals up to the limit as needed.
The interest rate of the existing bridge loan was 5.7% per year, but it has now increased to 6.3% through this refinancing. It has been redesigned as a long-term instrument with a maturity of 4 and a half years, resulting in an interest rate rise. Previously, in May, MBK Partners and Young Poong had extended the bridge loan maturity by one year and increased the interest rate to 6.2%.
The market assesses that there is sufficient collateral capacity. Aside from the 419,082 shares of Korea Zinc held by Bain Capital, 1,035,164 shares owned by Chairman Choi and 10 members of the Choi family have been provided as collateral. The total amount of collateral reaches 1,454,246 shares.
Considering that the Korea Zinc stock price was 816,000 won the previous day, the collateral value amounts to approximately 1.1866 trillion won. Since the term loan is 300 billion won, the loan-to-value ratio (LTV) is only 25%.
In the public takeover bid report from last year, it was specified that Bain Capital raised a 370 billion won bridge loan with a maturity of 9 months from Korea Investment & Securities. Consequently, the market anticipated that July of this year would be the maturity point, and the possibility of extending the bridge loan or converting it into a main financing has been raised.