이 기사는 2021년 10월 25일 07시38분 thebell에 표출된 기사입니다

Concerns are rising over the ability of DTR Automotive to fund its planned acquisition of Doosan Machine Tools.

DTR Automotive signed a stock purchase agreement with private equity firm MBK Partners in August to acquire 100% of Doosan Machine Tools for 2.4 trillion won ($2.04 billion) including debt, industry sources said on Thursday. The Kospi-listed auto parts maker said that the purpose of the acquisition, which will be made through its subsidiary GMT Holdings, is to expand its business portfolio.

Given the machine tool maker’s net debt of 409 billion won at the end of 2020, DTR Automotive is estimated to pay about 2 trillion won for the company. DTR Automotive has about three months until the expected closing date of January 28.

DTR Automotive is part of Dong Ah Tire & Rubber Group. The company was spun off from Dong Ah Tire & Rubber Co in November 2017.

DTR Automotive has sufficient capability to fund the acquisition, with earnings before interest, taxes, depreciation and amortization (EBITDA) of 111.6 billion won in 2020. Dong Ah Tire & Rubber is also expected to help fund the deal. Its EBITDA was only 20 billion won last year, but the company is said to have cash reserves of more than 800 billion won.

DTR Automotive plans to inject about 350 billion won, including down payment, through internal sources. About one trillion won will likely be funded through debt financing and outside sources. The remaining 200 billion won will be funded through bond issue and 600 billion won through short-term borrowing.

The company carried out a book building process to raise 150 billion won in dual-tranche bonds earlier this month, which ended up receiving only 108 billion won in bids.

DTR Automotive has hired KB Securities and Korea Investment & Securities to arrange acquisition financing, which is expected to amount to about 1 trillion won at around 4% interest rate.

The company is expected to start its marketing campaigns for acquisition financing in earnest in early next year, but it may face higher borrowing costs due to concerns over its credit rating and the possibility of key interest rate hike.

Local credit rating agencies put DTR Automotive on negative credit watch in August due to concerns that the company’s financial structure may deteriorate significantly after the acquisition of Doosan Machine Tools. The company currently has an A rating. (Reporting by Hee-yeon Han)