Stock Loans Mature This Year
Much attention is paid to how KCGI, which suffered a defeat at the recent shareholder meeting of Hanjin KAL, will respond to the maturities of stock loans scheduled for this year with borrowings constituting most of the fund KCGI used for additional Hanjin KAL share purchase. According to industry sources, the increasing volatility of the stock price is likely to pose a burden on KCGI’s redemption plan.
On April 20, KCGI must repay Yuhwa Securities money borrowed based on 690,000 shares. In addition, repayments to Acuon Savings Bank for 650,000 shares, The-K Savings Bank for 460,000 shares and Yuhwa Securities for 260,000 shares are scheduled for May and June. Then, a total of 11 maturities will follow within this year.
KCGI’s special purpose company currently holds 12.46 percent of Hanjin KAL shares and 73 percent of the shareholding has been offered as collateral. The interest rates at the savings bank are as high as 5 percent or so.
KCGI is currently under redemption pressure with the stock price of Hanjin KAL on the decline. “Although KCGI is requesting secured loans, securities companies are refusing to provide loans with the stock price fluctuating,” said an industry insider, adding, “Savings banks are saying no to additional or extended loans, too.” Under the circumstances, KCGI sold its shares in Hanjin at half of its purchase price on March 25.
Although KCGI is planning to continue running its funds by means of additional stock loans, this is likely to add to its interest burden. KCGI is currently running nine funds, which are divided into two with a duration of 10 years and seven with a duration of just three years.
It is said that KCGI will have to dispose of its Hanjin KAL shares if it fails at redemption. The shareholder alliance of KCGI, Bando Construction and former Korean Air vice president Cho Hyun-ah currently owns 42.13 percent of Hanjin KAL.