SBS Stock Pledge Determination... Will Taeyoung's Self-Rescue Plan Work?

Taeyoung Construction Workout Decision D-1
Green Light for Workout Initiation

With Taeyoung Group presenting additional self-help measures, including providing TY Holdings and SBS shares as collateral, a green light has been given for the commencement of the workout (corporate financial restructuring) of Taeyoung Construction. Taeyoung Construction plans to focus on securing final consent for the workout by attending the creditors' meeting.

Yoon Se-young, the founding chairman of Taeyoung Group, is delivering a statement at a press conference on additional self-rescue plans related to the workout held on the morning of the 9th at the Taeyoung Construction headquarters in Yeouido, Seoul. / Photo by Yonhap News

According to the financial sector on the 10th, KDB Industrial Bank convened major creditors, including the five major banks and IBK Industrial Bank, in the morning to discuss Taeyoung Group's additional self-help measures. Representatives from Taeyoung Group will also attend this meeting to appeal the sincerity of the self-help plan and seek approval for the workout commencement.

The day before, Yoon Se-young, the founding chairman of Taeyoung Group, stated, "If the existing self-help plan is insufficient, we will definitely save Taeyoung Construction by providing TY Holdings and SBS shares as collateral." He added, "We will boldly liquidate project financing (PF) sites that need to be closed and preserve sound projects to successfully complete the business," and said, "We will show this not in words but in actions."

He reiterated the thorough implementation of the four previously proposed self-help measures: ▲supporting Taeyoung Construction with 154.9 billion KRW from the sale of Taeyoung Industry ▲pursuing the sale of Ecobit and providing proceeds ▲providing Blueone shares as collateral and pursuing their sale ▲providing Pyeongtaek Silo shares as collateral.

If Taeyoung Construction enters the workout, the creditors will conduct due diligence and prepare a detailed financial restructuring plan. Taeyoung expects liquidity shortages to be resolved by April, when the plan is finalized. However, if necessary, they explained that they are willing to provide TY Holdings and SBS shares as collateral, expressing their determination to pledge all major shareholder equity.

At the same time, they drew a line regarding the sale of SBS shares. Choi Geum-rak, vice chairman of Taeyoung Group, said, "Providing SBS as collateral is not a problem according to legal interpretation. However, since it is a broadcasting company, there are many legal restrictions on sales unlike general companies," adding, "It is difficult to comment on the sales aspect."

The decision on whether to commence the workout for Taeyoung Construction will be made at the first creditors' meeting held on the 11th. For the workout to officially begin, at least 75% of the creditors (by debt amount) must approve. The voting rights of the creditors are approximately 33% from banks and about 20% from the Construction Mutual Aid Association. It is also reported that the voting rights of mutual finance institutions are significant. While the prevailing view is that there is no difficulty in gathering consensus among creditors centered on the Industrial Bank, opinions vary depending on individual interests.

Once the workout begins, the exercise of financial claims against Taeyoung Construction will be suspended for up to four months. During this period, a plan to successfully complete the workout will be developed, including debt adjustment and restructuring measures.

If the workout fails, Taeyoung Construction is likely to proceed to court receivership. Court receivership is a court-led corporate rehabilitation process, which is more stringent than a workout. This increases the likelihood of changes in the existing management. If the company is judged to have low survival value during this process, it may be liquidated or declared bankrupt.

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