Sungwon Pipe Announces Plan to Become Debt-Free by Year End 2010
The Company Fulfills Loan Obligations With Its Main Creditor Bank
SEOUL, South Korea, Dec. 20, 2010 /PRNewswire/ -- Sungwon Pipe Co. Ltd. ("Sungwon Pipe" or the "Company") (Pink Sheets: SNGWY), Korea's leading provider of stainless steel pipes, announced that the Company will implement a debt-free management initiative to realign its capital structure. As a part of this initiative, the Company terminated a loan contract with its main creditor bank, National Agricultural Cooperative Federation, after paying off a remaining balance of $1.7 million from the initial loan amount of $10 million. As of the end of 2009, the ratio of loans from financial institutions in comparison to total assets has declined significantly from 29.3% to 10.4%.
Other commitments made by the Company to reduce its overall debt include the following:
In July, the Company sold its subsidiary shares of Next Code Company for $ 10.7 million, or $1.80 per share.
In October, Miju Steel, a parent Company of Sungwon Pipe sold its real estate property, Samsung-dong office building for $15 million. In addition, Miju Steel sold its Ansan distribution center for $16.5 million and terminated a loan contract with its main creditor bank, Wooribank by paying off the remaining balance of $4.5 million from a $7.5 million credit loan, and remaining balance of $6.5 million from a $9 million secured loan.
In December, Miju Steel, sold its subsidiary shares of Bluegem D & C Co. Ltd. for $ 4.23 million, or $0.42 per share. As of this year in comparison to last year, Miju Steel's loan from financial institutions, have decreased from 39.98% to 21.76%.
Mr. Chung-Keun Kim, CEO of Sungwon Pipe stated, "As we look to increase Sungwon Pipe's overall efficiency, we recognize the importance of maintaining a healthy balance sheet and minimizing our debt obligations. Part of our strategy is to divest small volume subsidiary companies that are non-essential to our core operations. This is a critical step as the Company continues to focus on growing its high value and higher margin stainless steel pipe products. This new 'debt-free' initiative will allow us to more effectively manage the Company's expenses, assets and inventory going forward. "
"Moreover," Kim emphasized, "we will concentrate on profit driven management rather than purely volume focused expansion. I believe that by going back to our roots and refocusing on our core strengths, we will be able to build our position in the global market, broaden our scope of investors internationally and advance as a truly global company."
About Sungwon Pipe Co. Ltd.
Sungwon Pipe Co. Ltd. is a Korea-based company that is primarily involved in the production and supply of stainless steel pipes used in different industrial applications. Sungwon Pipe Co. Ltd. is Korea's number one stainless steel pipe manufacturing company. In December 2009, it acquired stockist and distributor MS Metal, as a wholly-owned subsidiary to become Korea's first and largest total stainless steel pipe company. The Company's products are used in paper manufacturing, petrochemical industry, food processing, heat exchangers, industrial structural products and shipbuilding. Sungwon Pipe distributes its products in domestic markets and recently announced an initiative to focus on the overseas markets with current contracts in the United States and Middle East. The Company's major customers include Samsung, Hyundai and Daewoo.
SOURCE Sungwon Pipe Co. Ltd.
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