'Industrial Water and Wastewater Treatment Plant' Eugene Chemtech Put Up for Sale [fn Market Watch]

[Financial News] Eugene Chemtech, a 30-year-old company specializing in industrial water and wastewater treatment plants, has been put up for sale in the mergers and acquisitions (M&A) market. As the water reuse facilities market rapidly expands amid water shortages caused by climate change and growing demand for ultrapure water from advanced industries, the company is being viewed as a valuable asset with a track record in power plant construction.
According to investment banking (IB) industry sources on the 14th, Seoul Bankruptcy Court decided to pursue a pre-approval M&A deal for Eugene Chemtech, a company undergoing rehabilitation, and selected Hyundai Accounting Firm as the sale adviser. The sale will be conducted through a third-party allotment of new shares and other methods, via an open competitive bidding process with no preferred bidder.
The schedule is being fast-tracked. Letters of intent (LOIs) and confidentiality undertakings must be submitted by 3 p.m. on the 18th. An information package will be distributed only to prospective buyers who have paid the information-use fee, while preliminary due diligence will take place over three days, from the 28th through the 30th of this month. Bids will be accepted from 10 a.m. to 3 p.m. on October 2.
Founded in October 1994, Eugene Chemtech is a comprehensive water-treatment company. Its core business is the manufacturing and engineering, procurement and construction (EPC) of industrial water and wastewater treatment plants, which are classified as liquid filtration equipment. Its headquarters are located on Seongam-ro in Mapo-gu, Seoul, and it has 28 employees, including the administrator and chief restructuring officer (CRO). Its major customers include Korea Western Power, Korea Southern Power, and Eugene Pilco, while its suppliers include Jeonggwang Entech and Entech.
Its specialization in power plant projects is considered its greatest strength. Its track record of supplying water-treatment facilities to numerous power plants in Korea and to Korea District Heating Corporation (KDHC) is among the strongest of its peers in the small and midsize business sector. The company also has full-line supply capabilities, carrying out the entire process on a turnkey basis, from raw-water purification and sanitation treatment to chemical dosing. Through its work on the Thai Binh 2 Thermal Power Plant project in Vietnam, it has also built up experience in overseas EPC projects requiring global standards. Its transaction network spanning public corporations and top-tier construction companies is another intangible asset.
The company entered rehabilitation proceedings because of a cash-flow crunch. As rising raw-material prices and labor costs increased its financial burden, a halt in new project orders left it unable to cover fixed labor costs and headquarters operating expenses. The company applied to Seoul Bankruptcy Court to begin rehabilitation proceedings on February 24 this year and received approval to commence them on March 25. It subsequently pursued early normalization of management through a pre-approval M&A deal.
IB industry sources identified mid-sized construction companies and machinery-equipment firms seeking to expand their environmental plant businesses, as well as strategic investors (SIs) preparing to enter Southeast Asian markets, as likely buyers. Emerging countries such as Vietnam and Indonesia, where urbanization is progressing rapidly, urgently need investment in water-quality improvement infrastructure and are considered promising export markets for Korean water-treatment companies. Because this is a pre-approval M&A deal, debt adjustment and the conclusion of the rehabilitation proceedings can be completed at once, reducing the burden on a buyer and increasing the likelihood of a successful transaction.
Moon Eun-joo, an accountant at Hyundai Accounting Firm, said, "Eugene Chemtech has both a track record in power plant water treatment accumulated over more than 30 years and turnkey design and construction capabilities." She added, "As the market is being reshaped around water reuse, ultrapure water, and zero-liquid-discharge facilities, the company’s track record and workforce, which an acquirer can immediately leverage for winning new orders, are attractive."
[email protected] Kang Gu-gwi Reporter