IMM consortium picked as preferred bidder for Ecorbit

A consortium of IMM Private Equity and IMM Investment has moved a step closer to owning South Korea’s No. 1 landfill company Ecorbit Co. after offering 2.1 trillion won ($1.6 billion) for the firm.

According to sources in the Korean investment banking industry on Monday, TY Holdings Co., Taeyoung Group’s holding company, has named the IMM consortium as the sole preferred bidder for Ecorbit’s full stake up for sale.

The two parties are expected to sign a binding contract after due diligence.  

Korea’s leading investment firm union beat three other contenders — Carlyle Group, Hong Kong-based Keppel Corp. and Gaw Capital Partners — after offering about 2.1 trillion won for Ecorbit’s 100% stake based on a corporate value of 2.7 trillion won, including Ecorbit’s liabilities.

As the IMM consortium is expected to place Korea’s largest landfill company under its wings, the latter’s major shareholder Taeyoung Group with a 50% stake is projected to expedite its restructuring process with the proceeds from the stake sale.

TY Holdings and global investment firm KKR & Co. Inc. each own 50% of Ecorbit.

Taeyoung's holding company and KKR agreed to sell the entire stake as part of cash-strapped Taeyoung Group’s workout plan.

TAEYOUNG’S ACCELERATED DEBT WORKOUT

Taeyoung filed for debt restructuring in December last year to revive the group, which is saddled with 5.6 trillion won in debt and loans it guaranteed.

Taeyoung has been seeking to sell off its assets, including Ecorbit, to normalize its business after its core construction unit Taeyoung Engineering & Construction Co. teetered close to bankruptcy late last year due to its inability to repay its huge debts amid a prolonged construction industry slowdown.

If Ecorbit's sale is completed as planned, Taeyoung will be able to repay 400 billion won to KKR, which TY Holdings borrowed at an interest rate of 13% in January.

After KKR takes 1.05 trillion won for 50% of Ecorbit's full stake and receives 400 billion won from TY Holdings, Taeyoung is expected to keep the remaining 400 billion won to 500 billion won from the sale of Ecorbit.

Earlier this month, the group also agreed to sell its headquarters building in Yeouido, Seoul’s main financial district, for about 250 billion won, as it speeds up the sale of its leisure business BlueOne.

FIERCE COMPETITION FOR ECORBIT

With the landfill industry starting to show signs of a slowdown earlier this year, the Ecorbit sale was forecast to hit some road bumps.

But competition for Korea’s No. 1 landfill company heated up instead thanks to the company’s healthy business backed by its steady cash flow.

Its 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) are forecast to reach some 250 billion won.

Ecorbit's stake sale price is 10 times its EBITDA.

The outlook for Ecorbit’s business is also rosy on growing market expectations for the landfill industry, as mounting waste and the industry’s high entry barriers brighten the market outlook.

Write to Jun-Ho Cha and Jong-Kwan Park at chacha@hankyung.com

Sookyung Seo edited this article.