2024-01-11 12:13:42
Taeyoung Construction in Yeouido, Seoul./News 1
The start of Taeyoung Construction’s workout (work to improve corporate structure) has been confirmed.
As a result of creditor financial institutions such as Korea Development Bank holding the first creditors’ council meeting on the 11th and voting, more than 75% of the bond amount agreed to initiate a workout for Taeyoung Construction. As a consensus was formed that the court receivership of Taeyoung Construction should be prevented, centered on creditors who are directly or indirectly influenced by the financial authorities, such as the Korea Development Bank, commercial banks, second-tier financial institutions, and Housing and Urban Guarantee Corporation (HUG), the contract was scheduled to continue until midnight on this day. Voting ended around 6 p.m.
An official from the financial authorities said, “This is the result of domestic financial institutions agreeing that the spread of the real estate project financing (PF) crisis should be prevented here,” adding, “Taeyoung Group is making self-rescue efforts by providing the holding company and SBS shares as additional collateral.” “It appears that what we promised to do also influenced the creditors’ quick decision,” he said. As Taeyoung Construction, which was once considered for court receivership, has begun work on improving its corporate structure, concerns regarding a chain crisis caused by PF in the construction and financial industries are expected to be alleviated to some extent.
Graphics = Park Sang-hoon
Taeyoung Construction, which had been anxiously awaiting the results of the creditors’ council vote on this day, was in a relieved mood when news came late in the followingnoon that creditors’ agreement had exceeded 75%, the condition for starting a workout. This is because, in a situation where Founding Chairman Yoon Se-young personally promised to put up the holding company TI Holdings and its key affiliate SBS shares as collateral, if the workout does not start, the entire group will inevitably suffer a blow. A Taeyoung Group official said, “We will faithfully implement the self-rescue plan we have prepared and strive for a quick normalization.”
With the workout plan confirmed, Taeyoung Construction must prepare a restructuring plan and a plan to improve its financial structure and submit them to creditors while creditors postpone bond exercise for the next three months.
As soon as the workout begins on the 12th, due diligence on Taeyoung Construction’s real estate PF business begins. Taeyoung Construction’s PF business sites total 60 locations, including 18 bridge loan sites and 42 main PF sites. We plan to quickly decide where to save and where to liquidate by comprehensively considering the business performance and business progress stage of each business site. Financial authorities believe that some liquidation is inevitable for businesses in the bridge loan stage where construction has not started and only borrowed land purchase costs.
Following the start of the workout, Taeyoung is expected to undergo intensive restructuring, including layoffs.
Even if workouts begin, there is a long way to go before normalization. There is a possibility that hidden insolvencies may emerge during the corporate debt due diligence process. After a meeting on the 10th, the creditors said, “During the due diligence process, if even one of the self-rescue plans promised by Taeyoung Group is not followed or if large-scale additional insolvency is discovered, the workout procedure may be halted.” It has been decided to sell shares of affiliates such as Ecobit and Blue One to raise funds, but there are concerns that the sale may be delayed or the full price may not be received.
An official from Taeyoung Construction said, “Internally, we are continuously checking the business site and financial situation in preparation for additional unexpected liabilities arising during the creditor due diligence process,” and added, “Unlike financial bonds, which are postponed due to the start of the workout, general construction costs, etc. are not scheduled. “As payments must be made as they are, we are also making plans to secure basic operating funds,” he said.
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