Hanwha L&C sells construction materials unitHanwha Living & Creative, a major materials producer, signed a contract with Morgan Stanley Private Equity yesterday to sell its construction materials business for 300 billion won ($294 million) as it shifts its focus to high-tech materials such as automobile and electronic components.
Hanwha Group, the nation’s 10th-largest conglomerate, said Hanwha L&C will be divided into two companies - construction materials and high-tech materials - by July 1 and the former will be sold to Morgan Stanley PE in late July.
After the ownership change, the construction unit will still be named Hanwha L&C. The company said that the materials business will likely change its name instead.
The construction materials business produces PVC window frames and flooring, including marble tiles. Although its profitability has fallen due to a slump in the construction industry, it had 719.8 billion won of revenue with operating profit reaching 22.2 billion won last year.
About 600 employees work for Hanwha L&C’s construction materials unit, but Morgan Stanley PE agreed to guarantee their jobs for at least the next five years.
The company, which separated from Hanwha Chemical in 1999, said that since Morgan Stanley PE will also have to take over its debts, the actual payment for the deal will be around 141 billion won. Hanwha L&C said it will use the cash to improve its financial stability and expand in high-tech materials. Its debt ratio is expected to drop from 180 percent to 110 percent after the deal.
The company said it will focus on auto parts, which account for 75 percent of sales in the high-tech materials sector, electronic components and solar power materials. It is the leader in glass mat reinforced thermoplastics, a material used in making automobile bumpers, with 70 percent of the global market share. It also produces lightweight reinforced thermoplastic and indium-tin-oxide film that is used in smartphones.
The company acquired U.S. auto parts materials producer Azdel in 2007 and has been supplying products to global automakers.
Hanwha Azdel’s plant in Lynchburg, Virginia, is currently under expansion, and another unit in Opelika, Alabama, is upgrading its production capacity.
BY JOO KYUNG-DON [firstname.lastname@example.org]