E-Land Park Ltd., restaurant and resort operating unit of South Korea’s E-Land Group, is seeking to sell its catering division in a bid to improve overall financial standing that has deteriorated in recent years. The sale is expected to help the group raise 1 trillion won ($876 million) in funding.

According to E-Land Group and multiple sources from the investment bank industry on Monday, E-Land Group has entered into an exclusive agreement with local private equity fund MBK Partners L.P. to sell its food business division managed by its subsidiary E-Land Park. MBK Partners has reportedly embarked on a due diligence to study the validity of the takeover. The deal will likely be completed by June if it unfolds as planned.

An unnamed official from E-Land Group said that it is “carefully considering the sale” of the food business as part of a push to “strategically promote the improvement of financial health this year.”

E-Land Park’s catering business division owns 18 brands including buffet restaurant Ashley, Jayeon Byeolgok, and Pizza Mall. Last year, the company posted 13.0 billion won in operating loss on sales of 805.4 billion won. E-Land Park, which also has leisure business division that manages Kensington Hotel and Corea Condo, depends highly on its food business division for sales and profit. Last year, its food service division generated 680 billion won in sales.

Market analysts estimate the sale value of E-Land Park’s restaurant chain business would exceed 1 trillion won, enough to help improve the financial standing of E-Land Group. E-Land Retail Co. and E-Land World Co. own 85.30 percent and 14.66 percent shares in E-Land Park, respectively.

Industry insiders, however, remain cautious whether the sale would actually take place. An unnamed official from the investment bank industry said there are lingering doubts over E-Land Group’s willingness to sell the business after the group has previously withdrawn other restructuring plans such as an initial public offering of E-Land Fashion China and the disposal of retailer Kim’s Club in Gangnam, southern Seoul. Earlier this month, it also announced to postpone an IPO of E-Land Retail that was originally planned to be finalized by May to the first half of next year.

By Kang Doo-soon and Han Woo-ram

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]