Oriental Brewery’s private equity owners secure refinancing deal

Media sources say that both Korean banks and foreign institution have lined up in recent months to court the two private equity outfits for a recapitalisation of the number-two South Korean brewer.

It has been argued that Affinity and KKR could use that liquidity to recoup some of their collective USD 675 million equity investment in Oriental on top of refinancing the company’s loans. However, people close to the action reportedly said that Affinity and KKR would only consider a transaction that actually reduces debt by lowering its interest expense.

Korea’s number two brewer had a market share of 41 percent (2008), trailing Hite Brewery Co. with 58.4 percent. Oriental will likely generate KRW 300 billion (USD 268.5 million) of EBITDA this year compared to KRW 255 billion at the time of the buyout, it was reported.

KKR bought Oriental Brewery with a USD 1.8 billion bid in May last year, beating Affinity and MBK Partners for the asset. KKR later sold 50 percent of the asset to Affinity. AB-InBev kept the right to buy the brewery back five years after the deal closes at a pre-agreed price that it did not disclose.