SK Ecoplant has sold its waste plastic subsidiary two years after acquiring it. The company is divesting non-core assets to improve its financial structure amid a continuing downturn in the construction industry.
According to investment banks and SK Ecoplant on the 7th, SK Ecoplant confirmed the sale of DY Indus and DY Polymer at the end of last year. The sale prices are reported to be in the 6 billion won range and 7 billion won range, respectively. The buyer of the companies has not been identified. A SK Ecoplant official noted, "This decision aims to strengthen financial soundness through the sale of non-core assets."
DY Indus and DY Polymer are specialized companies producing recycled waste plastic materials. In August 2022, SK Ecoplant acquired DY Indus and DY Polymer to secure technology for producing high-quality, high-value-added recycled plastic materials in the environmental business institutional sector and expand into the recycling-centric upstream waste sector.
Considering that the initial acquisition prices of DY Indus and DY Polymer were 6.6 billion won and 17.7 billion won, respectively, this sale is estimated to have resulted in a loss of about 10 billion won compared to the acquisition price.
The sale of DY Indus and DY Polymer by SK Ecoplant is part of a rigorous financial restructuring process. SK Ecoplant's financial structure has deteriorated due to project financing-related failures stemming from a real estate market slump and rising costs due to construction cost increases. The decision to divest seems to have arisen as DY Indus and DY Polymer, classified as non-core assets, recorded losses in the first half of last year and struggled to maintain business momentum.
As of the end of the third quarter of last year, SK Ecoplant's project financing guarantee amounted to 1.6 trillion won, significantly increasing from 200 billion won at the end of 2022. The debt ratio also surpassed the reasonable standard at 251% based on last year's third quarter. The company also recorded an operating loss of 11 billion won in the third quarter of last year, marking a return to losses.
Following this sale, SK Ecoplant's financial structure is expected to improve somewhat. However, given that the asset sizes of the sold companies are not large, their impact on the financial improvement level is anticipated to be minimal.
SK Ecoplant is undergoing rigorous financial restructuring alongside the sale of DY Indus and DY Polymer. In November of last year, the company disposed of its equity in the U.S. waste battery recycling specialist "Ascend Elements." This transaction secured approximately 131.6 billion won in liquidity for SK Ecoplant. Additionally, the company is attempting to improve its financial structure through workforce restructuring and the transfer of its headquarters.