[Edaily Marketin JI YEONG-EUI YunJi Kim Reporter] IMM Private Equity (IMM PE), a domestic private equity fund (PEF) manager, has begun taking steps to buy time to exit its investment in Hanssem. With acquisition financing totaling around 800 billion won set to mature by year-end, the firm is pursuing refinancing—including an extension of the maturity date—and its management strategy, which had previously focused on defending its financial structure and overcoming losses, now appears to be shifting toward enhancing corporate value.

The market appears to view this refinancing not merely as a maturity extension, but as a “bridge to an exit.” With the company now entering its fifth year since the acquisition, analysts assess that it has moved beyond the stage of merely holding on through cost cuts and asset sales, and has reached a point where it must generate actual recoverable value through revenue growth and a recovery in its stock price.

According to investment banking (IB) industry sources on the 8th, IMM PE is pursuing an extension of the maturity for the approximately 800 billion won in acquisition financing raised at the time of the Hanssem acquisition. It is reported that a plan is under discussion to extend the maturity by about one year and six months while maintaining interest rates at levels similar to the existing terms and applying a PIK (Principal-Interest-Capital) structure, in which a portion of the interest is added to the principal.

IMM PE signed an agreement in 2021 to acquire a 27.7% stake from former Honorary Chairman Cho Chang-geol, the founder of Hanssem, and finalized the transaction in early 2022. At the time, the acquisition price per share was in the 220,000 won range.

The situation following the acquisition was far from smooth. As the real estate and interior design markets slowed, Hanssem’s earnings and stock price fell in tandem, with the stock price at one point dropping to around 40,000 won. With the collateral value of the acquisition financing declining, concerns were raised about potential breaches of financial covenants and the loss of the benefit of time (EOD).

Starting in 2024, IMM PE focused on putting out the immediate fires. It sold Hanssem’s Sangam headquarters for 320 billion won and implemented cost controls, while also securing a waiver from the acquisition financing syndicate regarding financial covenants. Previously, it had bought time by injecting additional funds alongside Lotte Shopping and even conducting a tender offer. It would not be an exaggeration to say that the firm devoted all its energy to overcoming the financial covenant crisis.

This refinancing is seen as the starting point for restoring and realizing the company’s enterprise value. Although a proposal for a longer maturity extension than originally planned was discussed, it is reported that during negotiations with the lending syndicate, the decision was made to shorten the term. IMM PE plans to boost Hanssem’s enterprise value during the extension period and then repay the acquisition financing through a sale or other means.

To this end, IMM PE is restructuring Hanssem’s business operations to focus on its core business. It has absorbed Hanssem Nexus—which deals in premium imported furniture and kitchen furniture—through a merger, reduced internal transactions, and divested non-core businesses such as its Chinese subsidiary. Having streamlined its operations, the company is now focusing its efforts on highly profitable businesses such as premium B2B and Rehouse. As the effects of these cost-efficiency measures and business restructuring have been reflected in its financial results, Hanssem has emerged from the red and returned to profitability.

However, the fact that improved profitability has not yet translated into revenue growth remains a challenge. Since the current recovery in earnings is largely driven by cost reductions and asset efficiency, analysts note that to achieve further growth in corporate value, the company must also demonstrate revenue growth in its core business. Amid these developments, Hanssem is working to enhance its corporate value by simultaneously implementing shareholder returns, such as share buybacks and dividends. As Hanssem is a publicly traded company, its stock price is directly linked to the value of IMM PE’s stake; therefore, shareholder returns are also seen as a means of creating favorable conditions for a future exit.

A capital markets official familiar with the matter stated, “If a PIK structure—where a portion of the interest is added to the principal—is attached to interest rate terms similar to those previously in place, it effectively amounts to merely buying more time.” The official added, “Given the current level of corporate value, there is a cautious view among LPs as well, as they must consider the possibility of future extensions or the write-off of invested capital.” The source added, “Ultimately, the most desirable scenario is for Hanssem to increase its enterprise value through growth in its core business, thereby naturally improving the conditions for capital recovery in the process.”