Goldman Sachs reviews collecting $266 mn loan to Coupang before expiry date

Goldman Sachs is reportedly studying to redeem 300 billion won ($265.6 million) lent out to Coupang Inc. four years ago ahead of the expiry date after the South Korean e-commerce giant¡¯s Icheon warehouse, the loan collateral, recently went up in flames.

The U.S.-based investment bank is examining whether the deadly fire at the Coupang¡¯s distribution center is subject to an event of default (EOD), which refers to an occurrence of an event that enables the lender to demand repayment of the loan in advance of its due date, according to industry sources on Sunday. Experts say Goldman Sachs could demand prepayment if the building is proved to be lost its value due to the fire.

Coupang borrowed 300 billion won in a five-year maturity from Goldman Sachs Asian Special Situations Group (ASSG) in 2017 on security of a 40,000-square-meter (430,556.417 square feet) building and site in Incheon and its inventory assets as well as the 60,000-square-meter warehouse and its surrounding land in Icheon. The collateral was valued at 500 billion won and applied with a 60 percent loan-to-value (LTV) ratio. Goldman Sachs is known to have resold 200 billion won as senior debts with a 4 percent annual interest rate and owned the remaining 100 billion won as subordinated bonds at an annual rate of 8.5 percent.

Coupang took out the 300 billion won loan at an annual rate of 5.5 percent. The borrowing cost was higher than the industry average at that time due to the company¡¯s losses and low credit rating, sources found.

But things have changed now because the e-commerce market is booming and the company made its landmark debut on the New York Stock Exchange with valuation reaching 100 trillion won. Even if Goldman Sachs asks early payment on the debt, the company is expected to have no issue in borrowing from other lenders on better terms.

An industry source said many financial institutions are willing to provide loans to Coupang and the company may be able to borrow at lower than 2 percent annual rate.

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