Global Sae-A is grappling with a double bind: liquidity pressure stemming from the fallout of aggressive mergers and acquisitions (M&A), combined with mounting risks from troubled subsidiaries. The group spent most of its operating profit servicing interest, while cash flows at affiliates such as SAEA STX Entech and Ssangyong E&C have deteriorated, triggering warning signs across the group.
According to Financial Supervisory Service filings on the 14th, Global Sae-A's interest expenses on a consolidated basis last year reached 158.1 billion won, equivalent to 85% of its operating profit of 186.7 billion won. The interest coverage ratio — operating profit divided by interest expense — stood at just 1.2 times. An interest coverage ratio below 2 is typically read as a financial warning sign.
Current liabilities due within a year totaled 3.108 trillion won, against current assets of 2.350 trillion won, putting the current ratio at just 75%. Considering that a current ratio of 150–200% is generally considered stable for manufacturers, Global Sae-A's short-term solvency is flashing red. The company has been rolling over existing borrowings through new debt. Last year, new borrowings amounted to 3.086 trillion won, while repayments totaled 2.895 trillion won.
Global Sae-A, the group's unlisted holding company, is 100% owned by Chairman Kim Woong-ki and related parties. The group has pursued a string of acquisitions, beginning with SAEA STX Entech in 2018, followed by Taerim Paper in 2020, Ssangyong E&C in 2022, and Jeonju Paper and Jeonju One Power in 2024.
Despite the aggressive expansion, the cash-generating capacity of affiliates has fallen short of expectations. SAEA STX Entech, to which Global Sae-A had lent 97.1 billion won since acquiring it in 2018, recently entered liquidation proceedings. Only a portion of the loan is expected to be recovered, making substantial losses unavoidable.
SAEA Trading, the group's flagship affiliate, posted a consolidated net loss of 7.4 billion won last year amid weak earnings. Adding to the strain, the failed initial public offering (IPO) of Valmax Technology — a joint investment with private equity firm H&Co. — has exposed the group to put-option risk starting this year. If the put option is exercised, SAEA Trading is obligated to repay H&Co. the 18.7 billion won principal plus interest. SAEA Trading also guarantees 50 billion won in Ssangyong E&C's hybrid securities, bringing its total guarantee burden to 72.6 billion won.
Ssangyong E&C posted revenue of 1.871 trillion won last year, up 25.4% year-on-year, and its order backlog topped 9 trillion won. However, operating cash flow plunged to 1 billion won last year from 59.7 billion won in 2024. Financial burdens also include 540.1 billion won in interim payment loan guarantees and 1.164 trillion won in project financing (PF) completion guarantees.
Meanwhile, internal funds within the group have flowed to the holding company and the owner family. Global Sae-A borrowed 43.5 billion won from Ssangyong E&C, and sold 60.9 billion won in non-current assets to SJD LLC — a personal entity 99.94% owned by Chairman Kim's eldest daughter — while simultaneously lending 40.1 billion won to it. In effect, the cash-strapped holding company sold assets to the owner family's private firm and then lent back more than 65% of the proceeds. Global Sae-A explained, "After selling the real estate to SJD LLC, part of the proceeds was received in cash and the remainder was to be received later — it was not a case of the company actually lending its own money."
Global Sae-A has also extended a combined 65.8 billion won in loans to Chairman Kim, the largest shareholder, and related parties. SAEA Trading paid out a total of 257.5 billion won in dividends over the four years from 2019 to 2022, of which roughly 100 billion won went to the three second-generation owners, who hold a combined 38.06% stake.
The market views Global Sae-A's recent decision to appoint UBS as sale advisor and launch a package sale of its paper businesses — Taerim Packaging, Taerim Paper, and Jeonju Paper — as not unrelated to these liquidity pressures. An industry official noted, "With heavy refinancing burdens, if subsidiary distress materializes, it is hard to rule out that liquidity pressure could spread across the group."
In response, a Global Sae-A group official said, "SAEA Trading reduced dividends to the owner family in 2023 and 2024 and paid no dividends last year." The official added, "The group's consolidated operating profit rose 35% year-on-year last year, and overall affiliate performance is expected to improve further this year. Through structural earnings growth and the sale of non-core assets, the group's overall financial position is projected to become more solid."
