South Korea’s E-Land World, de facto holding company of retail conglomerate E-Land Group, is seeking to raise 1 trillion won ($886 million) through a rights issue as part of efforts to improve financial soundness and speed up the process of converting into a holding structure.

According to multiple sources on Wednesday, E-Land World is readying to issue convertible preferred stocks worth 1 trillion won, and local private equity fund operator Keystone Private Equity L.P. is currently recruiting investors from home and abroad for the fund that will buy the company’s convertible preferred stocks. The rights issue would allow its investors to command a stake of between 25 and 30 percent in E-Land World.

Convertible preferred stock is a preferred stock that carries an option for its shareholders to covert preferred shares into a fixed number of common stocks with voting rights. It can be converted at any time after a predetermined period, and the converting price is based on the performance of the company.

It is reported that Keystone PE has already attracted 300 billion won investment from offshore institutional investors, and a few additional local and foreign investors are also considering investment in the fund.

The retail conglomerate has promised potential investors initial public offerings of its subsidiaries including E-Land Fashion China Holdings to boost corporate value, said an unnamed E-Land Group official.

As of June 30, E-Land World has a debt ratio of 253 percent with 2.6 trillion won in equity capital and 6.6 trillion won in liabilities on a consolidated basis. If the company succeeds in securing 1 trillion won through the rights issue, its debt ratio would fall to 181 percent, giving it a respite from the liquidity stress.

The rights issue is also expected to speed up the process of transforming E-Land World into a holding company, a move that would accelerate the retail conglomerate’s group-wide restructuring for improving financial health and operational efficiency.

By Kang Doo-soon and Han Woo-ram

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