Woongjin Group's Rexfield CC Sale Draws a Flood of Interest [fn Market Watch]

[Financial News] The sale of Rexfield Country Club (Rexfield CC), a membership golf course in Yeoju, Gyeonggi Province, owned by Woongjin Group, is attracting a flood of interest. With annual EBITDA of around KRW 10 billion, it is being recognized as more competitive than Jack Nicklaus Golf Club in Songdo, Incheon, a competing property. This marks a different atmosphere from 2021, when sale talks with a mid-sized pharmaceutical company fell through after the parties failed to narrow their differences over the high valuation.
According to investment banking industry sources on the 2nd, Woongjin Group selected Deloitte Anjin as the sale adviser for Rexfield CC and is proceeding with the sale. The group is understood to have received letters of intent (LOIs) from six or seven prospective buyers. The sale is expected to proceed as a private deal without a formal bidding process. In practice, progressive bidding, in which bidders raise their offers auction-style, is highly likely to be used.
Woongjin Group is holding firm to what it considers an appropriate price for Rexfield CC, in line with its internal guidelines. This appears to have been influenced by Aekyung Group's sale of Jungbu Country Club last year for KRW 11 billion per hole. That transaction has effectively become a benchmark price. Based on this estimate, Woongjin Group appears to be seeking more than KRW 300 billion for Rexfield CC.
A source familiar with Woongjin Group said, "The situation is such that Rexfield CC can be sold only if the appropriate price is reached. I understand that retaining employees is also being prioritized," adding, "Given that Rexfield CC's annual EBITDA reaches KRW 10 billion, Chairman Yoon Seok-geum is understood to be confident in this asset."
As of the end of the first half of this year, Rexfield CC had total equity of negative KRW 9.7 billion, indicating capital impairment, yet recorded an operating profit margin of around 20% during the first half. It also holds tangible asset value as a 27-hole golf course in the Seoul metropolitan area, making it one of Woongjin Group's key monetizable assets.
However, analysts also say that because member entrance deposits and collateralized borrowings from financial institutions account for a large portion of its total debt of KRW 228.2 billion, the net cash Woongjin can secure may fall short of market expectations even if the sale is completed.
There are reportedly no ownership-structure hurdles to the sale of Rexfield CC. Since there are no contractual provisions, such as tag-along rights, between Woongjin, the largest shareholder, and Kukdong Engineering & Construction, Woongjin can sell its controlling stake separately.
Woongjin and Kukdong Engineering & Construction each held a 43.24% stake in Rexfield CC, but Woongjin is reported to have increased its ownership to 66.67% through a paid-in capital increase last year. Kukdong Engineering & Construction was formerly an affiliate of Woongjin Group, but after undergoing court receivership, its largest shareholder changed to the Sewoon Construction consortium in 2016.
Kukdong Engineering & Construction is known to have opposed Woongjin Group whenever it sought to strengthen its influence over Rexfield CC. It applied for injunctions against the issuance both in November 2017, when Rexfield CC pursued a KRW 5 billion third-party allotment for Woongjin, and last year, when the company carried out another paid-in capital increase.
Individual shareholders of Rexfield CC include Kim Myeong-su, Chairman Yoon's brother-in-law, with a 1.47% stake; Yoon Hyeong-deok, the chairman's eldest son and vice chairman of Rexfield CC, with 1.11%; and Yoon Sae-bom, his second son and vice chairman and CEO of Woongjin, with 1.11%.
[email protected] Kang Gu-gwi Reporter