Chairman Taeyoung Yoon Seok-min Invests 41.6 Billion Won in Holding Company... Controversy Over Indirect Support

Acquisition of New Capital Securities by Holding Company Worth 41.6 Billion
Same Scale as Tae Young Industry Share Sale
TY Holdings "To Clarify the Nature of Funds"

Amid growing controversy over Taeyoung Construction's workout, it has been revealed that Yoon Seok-min, chairman of the Taeyoung Group, purchased perpetual bonds (hybrid capital securities) issued by the group's holding company, TY Holdings. There are concerns that the proceeds from the sale of Taeyoung Industry, which was supposed to support Taeyoung Construction, were instead used to indirectly support the group holding company.

Partial view of the Taeyoung Construction building in Yeouido, Seoul [Image source=Yonhap News]

On the 5th, TY Holdings announced that it issued perpetual bonds worth 41.6 billion KRW to its largest shareholder, Chairman Yoon. The interest rate is 4.6% with a 30-year maturity. In the market, the fact that the size of this hybrid capital securities issuance matches the amount Yoon received from selling his stake in Taeyoung Industry (41.6 billion KRW) led to interpretations that Chairman Yoon contributed the proceeds from the stake sale in exchange for the hybrid securities. There is also an assessment that Yoon chose this indirect route to secure stable fund recovery.

Previously, TY Holdings disclosed that it invested a total of 154.9 billion KRW, including the amount from Chairman Yoon’s stake sale, from the Taeyoung Industry sale proceeds to support Taeyoung Construction. However, creditors claim that the amount invested was less than this. Taeyoung reportedly used 89 billion KRW of the 154.9 billion KRW sale proceeds to repay joint guarantee debts of TY Holdings, which creditors judge is not included in the support amount for Taeyoung Construction. Accordingly, creditors are demanding immediate implementation of self-rescue plans from Taeyoung.

TY Holdings denied allegations of a private loan. The company stated, "This was to clarify the nature of the funds Chairman Yoon injected into Taeyoung Construction." It further explained, "The nature of the funds contributed by Chairman Yoon had to be defined. If it were a gift, gift tax would reduce the amount, and if it were a loan, Chairman Yoon would have to receive interest, but since that was not feasible, issuing hybrid securities was chosen."

Inside and outside the related industry, concerns have been raised that this issue could further escalate conflicts between Chairman Yoon and the creditors. The decision on whether to commence the Taeyoung Construction workout will be made on the 11th.

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