Shinsegae E&C to sell leisure unit to reduce debt

South Korea’s Shinsegae Engineering & Construction Co. (Shinsegae E&C) announced on Wednesday that it will sell its leisure unit Josun Hotel & Resorts for 181.9 billion won ($136.6 million) to manage the risk by securing liquidity.
The sale includes two golf courses (Jayu Country Club and Trinity Club), three Aquafield water play areas in Starfield shopping malls, and a landscaping business.

Shinsegae E&C and Josun Hotel & Resorts plan to complete the sale by the end of April after getting approval from their shareholders next month.

This deal will increase Shinsegae E&C's capital by about 30 billion won and reduce its debt. Their debt ratio, which was 953% at the end of last year, is expected to drop to the 400% range.

Josun Hotel & Resorts will expand its business scope into the leisure sector.

The company currently operates nine hotels nationwide, including the Westin Josun Seoul. Among these, five hotels—Grand Josun Busan, Grand Josun Jeju, Josun Palace Seoul Gangnam, Gravity Seoul Pangyo, and Four Points by Sheraton Josun Seoul Myeongdong—were opened after the start of the COVID-19 pandemic in 2020.

The company expanded its size at a time when most hotels were hesitant to expand. Adding golf courses and water play facilities as new businesses are expected to maximize synergy effects, according to the company.

The acquisition funds for the leisure business will be raised through the financial sector.

Write to Jae-Kwang Ahn at ahnjk@hankyung.com