Cash-strapped Hanatour Service to sell property assets to stay afloat

[Photo by Lee Seung-hwan]

South Korea¡¯s No. 1 travel agency Hanatour Service Inc. is seeking to sell its Seoul headquarters building or 43 percent of its stake in the Hana Building in Jongno, central Seoul and two business hotels as part of efforts to secure financial ammunitions before massive downsizing under virus-driven liquidity woes.

The company has been tapping into potential candidates and already signed a buyout contract with one of them for the headquarters, an unnamed company official said on Tuesday.

The Seoul head office building is currently owned by Chun Ho Enterprise. Hanatour Service acquired a 43 percent stake to use the first to sixth floors for 28.8 billion won ($26.2 million) in 2015. The valuation of the stake is estimated at above 100 billion won, raising expectations for a relief to the money-losing travel agency.

Amid the worst-ever virus crisis, Hanatour Service is projected to have incurred a loss of 200 billion won for full 2020 before excluding corporate tax, the biggest loss since inception with its international business wrecked by the pandemic outbreak.

The company recently has opted to cut payroll. All its executives were already converted to temporary position late last year, a step before the company receives applications for voluntary retirement. If half of its 2,500-strong staff accepts the early retirement, Hanatour Service will have to pay them a large amount of compensation benefits.

The latest sale is expected to help it secure financial ammunitions to obtain working capitals and prepare for the planned downsizing.

Hanatour Service currently operates three business hotels in Seoul. Up for sale is Tmark Grand Hotel Myeongdong and Tmark Hotel Myeongdong. The company acquired the latter for 88 billion won in 2019.

Shares of Hanatour Service closed 0.82 percent higher at 61,500 won in Seoul on Wednesday.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]