이 기사는 2022년 01월 21일 08:06 thebell 에 표출된 기사입니다.

HDC Group’s affiliate HDC Hyundai Engineering Plastics (HDC Hyundai EP) has scrapped its plan to sell its environmental, social, and governance (ESG) bond due to frozen investor sentiment after fatal accidents at HDC Hyundai Development Company’s construction sites in Gwangju.

HDC Hyundai EP, which planned to launch a bookbuilding process on Thursday, has decided to postpone the bond issuance indefinitely amid negative investor sentiment, investment banking sources said on Wednesday.

The decision has been made as the aftermath of a fatal collapse of an apartment building in Hwajung-dong in Gwangju occurred on January 11 gets more serious.

HDC Hyundai EP, which manufactures chemical, rubber, and plastic products, has no relevancy to the construction industry, but the company has believed it is better to postpone its bond sale as HDC Group is being severely damaged after the recent accident.

Asset management firms are hesitant to purchase bonds issued by HDC Group’s affiliates due to a possibility of a credit rating downgrade.

HDC Hyundai EP initially planned to raise 30 billion won ($25 million) in a 3-year bond issuance. KB Securities was selected as a lead bookrunner, with NH Investment & Securities participating in an underwriting syndicate.

The company planned to sell the bond in the form of ESG bond, with an aim to use the proceeds to invest in superplastic production through partnerships with the nation’s conlomerates SK Group and CJ Group.

HDC Hyundai EP agreed to take over polyphenylene sulfide business from SK Chemicals for 38.5 billion won, along with SK Chemicals’ production line in the southern city of Ulsan. It also signed an agreement to establish a joint venture with CJ Cheiljedang, aiming to complete a production plant in Indonesia exclusively for marine biodegradable plastic and start mass production.

HDC Group’s affiliates have been seriously affected by HDC Hyundai Development Company’s damaged public image after the building collapse. HDC Holdings, the group's holding company, owns 48.3% of HDC Hyundai EP, 95.2% of HDC I&Cons, and 40% of HDC Hyundai Development Company. (Reporting by Chan-mi Oh)