By Kim Yoo-chul
Staff reporter
Dongbu Group is trying to realign its focus by spinning off agricultural businesses from Dongbu HiTek, which it sees as the group's future growth engine.
HiTek hopes that its debts will be reduced to 400 billion won by the end of the year from 1.4 trillion won at the end of the first quarter.
Additional funds needed will be raised from the sale of its stake in Dongbu Metal, an affiliate that specializes in ferroalloys as well as agricultural business spinoffs.
"Dongbu HiTek will spin off the agricultural unit in a campaign to lower its debts to below 1 trillion won. We are reviewing a possibility to list the agricultural unit," Dongbu HiTek’s chief financial officer (CFO), Jang Il-sang, said in a news conference in the company’s headquarters in downtown Seoul, Monday.
Jang emphasized such asset sales will help reduce the net debt of the group's chip-making unit to below 100 percent by the end of this year from 288 percent as of the end of last year.
"Several financial and strategic investors are interested in our agricultural business, though we can’t name the potential buyers at the moment," Executive Vice President Ku Ja-yong told reporters.
"These asset sales are being executed in a manner that does not to disrupt our management control of Dongbu HiTek," Jang told reporters.
He advised potential buyers to buy stakes in its agricultural unit as the group plans to it on the Korea Exchange (KRX).
The restructuring plan boosted shares of Dongbu Hitek. On Monday, they rose 9.28 percent to end at 10,600 won.
The company is heavily focused on the foundry business ― a manufacturing process, which has widely been adopted by chipmakers to save skyrocketing costs of research and development (R&D).
Jang said the agricultural business aims to reap 1.8 trillion won in annual total sales by 2015 from 700 billion won last year by injecting more resources to strengthen its overseas businesses.
"By 2017, we will invest 200 billion won to expand our presences in eco-friendly sectors such as bio-tach," Jang said.
Dongbu HiTek's agriculture branch was the first in South Korea when it was established in 1953.
Then, it has expanded to cover a variety of different sectors ― fertilizers, seeds, veterinary pharmaceuticals, and environment-friendly agricultural materials.