Taeyoung Construction Workout Decision One Day Away... Creditors' Meeting to Be Held

As the first Financial Creditors' Meeting to decide on the commencement of the workout (corporate financial restructuring) for Taeyoung Construction approaches in one day, the movements of the creditors and the Taeyoung Group are becoming busy. The main creditor bank, Korea Development Bank, convened a meeting of major creditors to listen to the explanation of the self-rescue plan proposed by the Taeyoung Group and discussed the workout plan.

On the 28th, Taeyoung Construction, which is experiencing a liquidity crisis due to real estate project financing (PF), applied for a workout (corporate restructuring). The Taeyoung Construction flag is fluttering in the wind at the Taeyoung Building in Yeongdeungpo-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

According to the financial sector on the 10th, Korea Development Bank will hold a meeting with major creditors, including the five major commercial banks (KB, Shinhan, Hana, Woori, NH Nonghyup) and Industrial Bank of Korea, at its headquarters in Yeouido, Seoul, in the morning. This meeting was reconvened after being canceled on the 8th. It is reported that the Taeyoung Group also attended the meeting.

At the meeting, explanations and opinions on the self-rescue plan proposed by the Taeyoung Group the previous day were reportedly heard. A creditor group official said, "It will be an opportunity to listen to a detailed explanation of the self-rescue plan presented by the Taeyoung side," adding, "Discussions related to the execution and procedures of the workout will also take place."

After the financial authorities, creditors, and even the Presidential Office issued a 'final ultimatum,' the Taeyoung Group presented a self-rescue plan the day before. While stating that it would proceed with the confirmation process for the existing four self-rescue plans discussed with Korea Development Bank, it proposed additional self-rescue measures, including ▲providing SBS Medianet shares as collateral ▲providing shares held by the major shareholder TY Holdings (33.7%) and the holding company's SBS shares (36.9%) as collateral in case of worsening liquidity shortage.

In fact, the holding company TY Holdings lent 41.6 billion KRW to Taeyoung Construction, supporting the previously promised sale proceeds of Taeyoung Industry amounting to 154.9 billion KRW. Additionally, TY Holdings held a board meeting the day before and delivered a letter of commitment to the creditors regarding the existing self-rescue plans, including ▲promotion of the sale of Ecobit Co., Ltd. and support for Taeyoung Construction ▲providing shares of Blue One Co., Ltd. as collateral and promoting its sale ▲providing shares (62.5%) of Pyeongtaek Silo Co., Ltd. as collateral.

This trend appears to be influenced by the authorities' stance to prevent the Taeyoung Construction workout from spreading into a liquidity crisis at the holding company TY Holdings. Lee Bok-hyun, Governor of the Financial Supervisory Service, who met with Yoon Se-young, the founding chairman of Taeyoung Group, also hinted at a grace period for TY Holdings' joint debt, stating, "We will support this by issuing non-action opinions to ensure that financial institution officials are not held responsible afterward."

As the creditors gave a positive evaluation of Taeyoung Group's self-rescue plan, a green light was turned on for the commencement of the workout. The creditor group emphasized, "This is the first starting point to restore market confidence," and added, "We hope Taeyoung Group will promptly request cooperation for the commencement of the workout and normalization in front of each creditor based on the additional self-rescue plan and the major shareholder's responsibility fulfillment plan announced this time."

However, the creditor group warned that if Taeyoung Group fails to implement the self-rescue plan, the workout can be suspended at any time. The creditor group also stated, "If even one of the self-rescue plans promised by the affiliated companies and Taeyoung Group is not kept, the workout procedure may be suspended, and if a large-scale additional insolvency is discovered during the due diligence process, the workout procedure will also be suspended."

The key is to exceed a 75% approval rate (based on the reported claims to Korea Development Bank) regarding the commencement of the workout at the first Financial Creditors' Meeting scheduled for the 11th. While the banking sector, including Korea Development Bank, Industrial Bank of Korea, and commercial banks, leans toward starting the workout, the total number of creditors for Taeyoung Construction reaches 609. These include banks, securities firms, insurance companies, capital companies, as well as construction mutual aid associations and mutual finance unit associations. The voting rights of the banking sector, including Korea Development Bank, remain at about 33%.

The financial sector expects no major difficulties in starting the workout, but it is also anticipated that some creditors may want to recover their claims quickly depending on their interests. A creditor group official said, "Although the process will be conducted in the form of a written resolution, it will take physical time for the 609 creditors to organize their positions and collect these opinions," adding, "The results will likely be announced in the evening of the same day or the following day at the earliest."

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