Taeyoung Presents Hollow Self-Rescue Plan, Continues 'Tug of War' with Creditors

Chilly Atmosphere at 3-Day Briefing "No Expected Self-Rescue Plan"
Kang Seok-hoon, KDB Chairman, Warns "75% Agreement May Be Difficult"
Workout 'Start' Decided at 1st Creditors' Meeting on 11th

Taeyoung Construction, which applied for a workout due to liquidity issues in real estate project financing (PF), has completed a creditors' briefing session. On the 4th, the traffic light in front of Taeyoung Construction's headquarters in Yeouido, Seoul, turned red. Yoon Se-young, the founding chairman of Taeyoung Group, acknowledged management's mistakes during the briefing and requested consent for the workout, but the main creditor bank, the Korea Development Bank, asked for an additional self-rescue plan. Photo by Kang Jin-hyung aymsdream@

At the pre-briefing session for Taeyoung Construction held ahead of the decision to commence a workout, the anticipated high-intensity self-rescue plan did not materialize. Even with 91-year-old Yoon Se-young, the founding chairman of Taeyoung Group, reading an appeal letter requesting approval for the workout, the plan did not include the highly anticipated utilization of SBS shares or specific owner personal fund contributions. As a result, a tug-of-war over the self-rescue plan between Taeyoung Group and the creditors is expected to continue until the financial creditors' meeting on the 11th.

In particular, the main creditor bank, KDB Industrial Bank, and the creditors raised trust issues, claiming that parts of Taeyoung Group's self-rescue plan proposed at the time of the workout application were not implemented as promised. They plan to demand a renewed commitment to sincerely implement the self-rescue plan, suggesting that various controversies will persist before the workout officially begins.

About 700 representatives from approximately 400 creditor financial institutions attended the Taeyoung Construction creditors' briefing held on the 3rd at the KDB Industrial Bank headquarters in Yeouido, Seoul. Chairman Yoon appealed, saying, "It was a managerial mistake to overestimate the potential of the real estate PF business," and "If given a chance to repay the debt, we will do our utmost to revive Taeyoung Construction," but the atmosphere remained cold throughout the two-hour briefing.

Already Known Self-Rescue Plan "No Concrete Implementation Plan"

SBS Headquarters Building. Photo by Yongjun Cho jun21@

During the briefing, a creditor representative who left the venue commented, "The self-rescue plan is not much different from what was previously reported," and evaluated it as "neither concrete nor satisfactory in terms of implementation plans."

The self-rescue plan presented by Taeyoung Group to the creditors that day included ▲supporting Taeyoung Construction with 154.9 billion KRW from the sale of Taeyoung Industry ▲supporting Taeyoung Construction after selling 50% of the shares of the affiliated comprehensive environmental company Ecobit ▲providing shares of the golf and leisure business company Blue One as collateral and pursuing sale ▲providing 62.5% of shares of Pyeongtaek Silo as collateral. Additionally, they planned to raise further funds through personnel and organizational restructuring.

The 1.6 trillion KRW scale self-rescue plan was considered insufficient by the Industrial Bank and creditors, who also emphasized the need for a more concrete implementation plan. The absence of the owner family's personal fund contribution plan and the plan to utilize SBS shares, which had attracted significant attention, was a major reason for the harsh criticism of the plan.

Moreover, while Taeyoung Group estimates contingent liabilities at 2.5 trillion KRW, the creditors estimate the debt scale at over 16 trillion KRW, including 1.3 trillion KRW in direct debt, 5.5 trillion KRW in performance guarantee debt, and 9.5 trillion KRW in joint guarantee debt, showing a significant difference in perspectives.

Yang Jae-ho, head of the Corporate Restructuring Division 1 at the Industrial Bank, said, "(Taeyoung Construction's self-rescue plan) is judged insufficient to proceed with the workout," and pointed out, "More self-rescue efforts are needed." In response, Yang Yoon-seok, executive director of TY Holdings, said in a press briefing after the session, "SBS has many restrictions under the Broadcasting Act, but we will consider it if the creditors raise the issue," and added, "(The owner’s personal fund contribution) is fully recognized and being prepared."

Kang Seok-hoon, Chairman of KDB, Pressures "Taeyoung Changed Its Words, Difficult to Get 75% Creditor Approval"

[Image source=Yonhap News]

The Industrial Bank plans to demand a stronger implementation plan for the self-rescue measures from Taeyoung Group. Especially since the self-rescue plan proposed during the workout negotiations was not properly implemented, they emphasize the need for a sincere implementation plan.

The Industrial Bank cited two cases where the self-rescue plan lost trust: only 40 billion KRW out of the 154.9 billion KRW from the sale of Taeyoung Industry was supported to Taeyoung Construction, and the plan to use funds secured by Blue One shares to repay TY Holdings' finances was changed. They claim that the promise to use funds from Taeyoung Industry and Blue One as workout resources was not faithfully fulfilled.

Chairman Kang Seok-hoon, speaking to reporters after the briefing, said, "We requested a firm commitment to implement the four self-rescue plans and asked Taeyoung Group to announce this at today's creditors' briefing, but they only asked for help, saying they would try hard." He added, "It is very difficult to expect that 75% of the creditors would agree to this self-rescue plan in common sense," and said, "We plan to request the creditors to get a renewed promise on the implementation."

The decision to commence the Taeyoung Construction workout is expected to be made at the first financial creditors' meeting on the 11th. If rejected, the workout process will end, and the possibility of entering court receivership will increase.

Meanwhile, Taeyoung Construction's stock price has been highly volatile around the briefing. The stock price surged more than 30% until the day of the briefing as investors bet on the workout commencement. However, due to concerns about the uncertainty of the workout commencement, the stock price showed an unstable trend on the 4th, repeatedly falling sharply and recovering in early trading.

This content was produced with the assistance of AI translation services.