By Kim Yoo-chul
Staff Reporter
Eugene Group, a small-sized conglomerate centered around logistics, finance and construction, has been facing worsening financial soundness following the ambitious acquisition of the nation’s No. 1 electronics retailer.
In an apparent move to soothe such mounting concerns, its Chief Strategic Officer Joo Young-min held an ``emergency’’ press conference, Thursday, at a Plaza Hotel in central Seoul.
``We will secure 300 billion won in cash this year by selling the group-owned idle factory properties including 112 billion won by selling stocks and idle plant sites of the group’s affiliate and 95 billion won by selling a headquarters of KoreaCement,’’ Joo said.
``We had planned to announce the long-term management plan including measures to increase financial soundness, however, worries were high in markets of our short-term future,’’ according to the official.
In December last year, the group agreed with Himart to buy all of the local electronics retailer’s shares for 1.95 trillion won. Under the deal, Eugene Corp., the group’s flagship company, will take over Himart’s management rights from Affinity Equity Partners and related parties.
But local credit rating agencies lowered investment ratings of the group’s key affiliates to ``Negative,’’ citing 1.1 trillion won in borrowings.
To ease financial concerns, the group scrapped its earlier plan to bring Himart to China in the future.
``We don’t have any immediate plan to strengthen Himart’s China business because we need to solve urgent problems first,’’ Joo told The Korea Times, adding competition in that segment was very high in China. Earlier, the group’s vice chairman Kim Jae-sik told reporters that Eugene plans to bring Himart to China.
At the conference, Eugene announced that it will boost competitiveness by merging three of its affiliates including KoreaCement.
``We hope the acquisition will save over 10 billion won, annually, in costs and the deal will pave the way for the group to lower debt ratios to 118 percent from the current 195 percent, while increasing total assets to 1.5 trillion won this year,’’ Joo said.
The group expanded into the logistics industry by taking over local parcel delivery service firm Logen Corp. as well as two other logistics firms in 2007.
It also entered the financial industry by taking over a controlling stake in Seoul Securities and Seoul Securities’ other financial affiliates in late 2006 and early 2007.