[Edaily Marketin Reporter LEE GEON-EOM ] HANWHA SYSTEMS(272210)has secured 1.4 trillion won in liquidity by disposing of its remaining stake in Hanwha Ocean(042660) through a Price Return Swap (PRS) arrangement, but some observers point out that the potential burden of cash outflow has increased. They explain that the proceeds from the sale are recorded as borrowings on the balance sheet, and the structure requires the company to make up the difference if the stock price falls below the benchmark price at the time of settlement.

According to the credit rating industry on the 20th, Korea Ratings assessed in an issuer comment on the 19th that while this sale is positive in terms of expanding liquidity, the scale of cash outflows related to the PRS requires monitoring. A PRS is a contract in which the buyer settles the difference between the reference price and the sale price with the seller when the shares are disposed of. If the stock price falls, the seller bears the loss.

At a board meeting on the 16th, HANWHA SYSTEMS decided to dispose of 22,169,660 shares (7.24%) of Hanwha Ocean common stock for 1.3834 trillion won via a PRS arrangement. The reference price is 62,400 won per share, based on the closing price on the 15th. This is the second such transaction following the sale of a 4.33% stake for 1.7 trillion won last April, and it marks the complete divestment of Hanwha Systems’ holdings in Hanwha Ocean. The move comes in response to increased funding needs, including the space satellite business, which will require an investment of approximately 20 trillion won through 2040.

However, PRS transactions are treated as secured borrowing for accounting purposes, thereby increasing the company’s book debt. HANWHA SYSTEMS’ consolidated total debt more than septupled, rising from 113.2 billion won at the end of 2024 to 3.3911 trillion won as of the end of June this year. The reflection of the first PRS transaction amount as debt in April had a significant impact. During the same period, the total debt-to-EBITDA ratio jumped from 1.2x to 6.8x.

Han Shin Rating estimated that if this transaction is recognized in the same manner, the consolidated debt-to-equity ratio and debt dependency ratio would rise to 189.4% and 36.1%, respectively. The calculation suggests that if the buyer sells all of its shares on the market, thereby eliminating the related debt, these ratios would drop to 122.0% and 16.7%, respectively.

The issue lies with Hanwha Ocean’s stock price. While the base price for the first PRS was 128,000 won—the closing price on April 3—the base price for the second PRS was 62,400 won—the closing price on the 15th—meaning it has fallen to less than half its value in just half a year.

Han Shin Rating viewed the impact of the first contract as limited, as a significant portion of the underlying assets had already been settled. However, it judged that the potential burden of cash outflows could increase with the addition of the second contract. The settlement cycle for the second contract has also been shortened from three months to one month.

Kwon Hyuk-min, a senior researcher at Korea Ratings, stated, “From the perspective of managing actual financial burdens, this is positive in that the inflow of proceeds from the sale has bolstered liquidity and secured investment funds.” However, he added, “Since additional cash outflows will occur if the stock price falls below the reference price at the time of settlement, we will monitor Hanwha Ocean’s stock price trends and the settlement terms for each contract.”

He added, “We also plan to review the specific plans for utilizing the newly secured funds and monitor trends in financial stability resulting from expanded investments.”