Taeyoung Raises White Flag: Workout Green Light If 'Additional Self-Rescue Plan' Prepared

Sale Proceeds of Taeyoung Industry
89 Billion KRW Paid to Taeyoung Construction

TY Holdings Provides Collateral and
Additional Self-Help Plans Under Review

If 75% Agree at Financial Creditors' Meeting on 11th,
4-Month Grace Period Granted

Taeyoung Group has turned on a green light for the workout of Taeyoung Construction by agreeing to implement all 'four major self-help measures' after a struggle with the government and creditors. The financial sector expects that if Taeyoung Group prepares satisfactory additional self-help measures, there will be no major issues in deciding to start the workout at the financial creditors' meeting scheduled for the 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@

According to the financial sector on the 8th, Taeyoung Group reportedly announced that it would implement all the so-called four major self-help measures previously agreed upon with KDB Industrial Bank before applying for the workout. The four major self-help measures are ▲supporting Taeyoung Construction with the sale proceeds of Taeyoung Industry (154.9 billion KRW) ▲selling Ecobit and supporting Taeyoung Construction with the sale proceeds ▲providing Blueone shares as collateral and promoting their sale ▲providing collateral for Pyeongtaek Silo (62.5%).

Taeyoung Group previously sparked controversy over non-implementation of self-help measures by using 89 billion KRW out of the 154.9 billion KRW sale proceeds of Taeyoung Industry, which was supposed to support Taeyoung Construction, to repay joint debt of its subsidiary TY Holdings. In response, not only the Industrial Bank but also financial authorities harshly criticized it as a "self-help measure that cuts someone else's bone" and pressured Taeyoung Group to submit a self-help implementation plan by the weekend.

Following the authorities and even the Presidential Office issuing a final ultimatum, Taeyoung Group has tentatively surrendered. It is known that the 89 billion KRW, which was used to resolve TY Holdings' debt from the Taeyoung Industry sale proceeds, will be paid to Taeyoung Construction, and confirmation procedures will be taken for the remaining self-help measures. It is also reported that the sale proceeds of the daughter’s shares (51.3 billion KRW), which were previously excluded from the self-help plan because she was not involved in management, will be used for this purpose.

The Industrial Bank stated at the so-called F4 (Financial 4) meeting attended by Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok and others, "There has been some progress, such as Taeyoung Group promising to implement the four self-help measures submitted at the time of the workout application, and the creditors will continue to negotiate based on this."

With Taeyoung Group agreeing to implement the existing four major self-help measures, only the hurdle of 'additional self-help measures' remains for the workout. The creditors and financial authorities have proposed providing the major shareholder shares (33.7%) of the holding company TY Holdings, owned by founder Yoon Se-young and others, as collateral. Taeyoung Group is reportedly reviewing additional self-help measures including this.

If a satisfactory level of self-help measures is derived for the creditors, the workout procedure for Taeyoung Construction is expected to accelerate. The starting point is the financial creditors' meeting to be held on the 11th. At this meeting, ▲formation of the council ▲initiation of joint management procedures ▲whether to defer exercise of creditor rights and the deferral period ▲management standards for real estate project financing (PF) sites will be discussed. If the creditors' meeting resolves to start the workout with the consent of 75% of creditors (based on credit exposure), the exercise of creditor rights against Taeyoung Construction will be deferred for up to four months.

Once the workout procedure begins, the creditors will conduct due diligence on Taeyoung Construction's assets and liabilities and prepare a corporate improvement plan. The corporate improvement plan, which will be formed over up to four months, typically includes ▲handling plans for PF sites ▲financial structure improvement plans ▲liquidity procurement plans ▲company management plans and management control measures. The main creditor bank, Industrial Bank, will hold several meetings as necessary to discuss current issues and resolve handling plans.

If the corporate improvement plan is established as scheduled, the resolution on the corporate improvement plan will be decided at the second creditors' meeting around April 11. It is principle to resolve within three months from the workout start date, with a one-time extension allowed. The signing of the corporate improvement plan implementation agreement between Taeyoung Construction and the creditors is likely to take place around May 11, within one month from the second resolution date. Thereafter, joint management procedures by the creditors, including implementation of the corporate improvement plan, will proceed.

Deputy Prime Minister Choi said, "Taeyoung Group needs to promptly implement the four major self-help measures already presented and gain the trust of creditors by presenting sufficient and concrete additional self-help measures," and added, "The creditors should also proceed with the workout procedure for Taeyoung Construction normally if the group's willingness for effective self-help efforts is confirmed."

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