Aluko Guarantees 77.1 Billion Won Debt for Loss-Making Subsidiary Alu Materials America, Adding 19% of Equity in Contingent Liabilities
Aluko decided to provide a joint guarantee for a USD 50 million foreign currency facility loan to its subsidiary Alu Materials America Inc. The guaranteed amount in KRW is 77.075 billion won, representing 19.04% of the company's recent consolidated equity of 404.858 billion won.
The subsidiary Alu Materials America Inc. had negative equity of 917 million won as of end-2025 and recorded a net loss of 1.577 billion won, indicating severe financial distress. The 8-year guarantee period adds long-term credit risk to Aluko.
This guarantee increases Aluko's total outstanding debt guarantees to 218.792 billion won. The decision was approved at a board meeting with all three outside directors present.
[AI Summary]Aluko's new debt guarantee for its already capital-eroded US subsidiary adds contingent liabilities equivalent to 19% of equity, significantly increasing financial risk. Unless the subsidiary's performance improves, this guarantee may pressure Aluko's financial stability and stock valuation.