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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Union Korea Pharmaceutical, currently undergoing court-led corporate rehabilitation, has submitted its rehabilitation plan to the court as part of efforts to restructure its debts.
According to industry and legal sources on March 7, the court-appointed administrator submitted the rehabilitation plan last month to the Seoul Bankruptcy Court (Rehabilitation Division 14). The submission comes about five months after the company entered rehabilitation proceedings in September last year.
The plan reportedly outlines a strategy to repay debts through the proceeds from a company sale. Union Korea Pharmaceutical’s total debt is estimated to be in the 500 billion won range.
Part of the debt will be repaid using the 300 billion won acquisition price offered by Bukwang Pharmaceutical, which has agreed to acquire the company despite Union Korea Pharmaceutical being in complete capital impairment and facing a potential delisting.
A legal industry source said the remaining debt is likely to be resolved through a debt-for-equity swap, under which the company would issue new shares and distribute them to creditors.
Creditors and other stakeholders will now submit their opinions on the rehabilitation plan. The court will then schedule a creditors’ meeting to vote on the plan. If creditors approve it, the court will grant formal approval and monitor whether the company carries out debt repayments in accordance with the plan before closing the rehabilitation process.
Bukwang Pharmaceutical was selected in January as the preferred bidder for Union Korea Pharmaceutical through a stalking horse bidding process, in which a preliminary buyer is chosen while allowing other investors to submit competing offers.
The acquisition is expected to be completed in April, after the Korea Fair Trade Commission completes its merger review.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
