Delays Feared in Tae-Young PF Project Site Processing... Procedural Difficulties

Submission of PF Project-Specific Handling Plans Due by 26th
Many Still Unsubmitted Despite One Extension
Slow Agreement Due to Complex Interests... Bridge Loan Projects Key
Magok CP4 Project to Receive New Funding... Interest Rate Reduction Also Decided

[Image source=Yonhap News]

The workout (corporate restructuring) plan of the creditors of Taeyoung Construction, who must complete asset and liability audits in March and proceed with the resolution of the corporate improvement plan on April 11, is facing setbacks. This is due to delays in submitting normalization plans for each project site under the mandatory project financing (PF). There are concerns that if the normalization plans, which were extended once on the 11th, miss the second deadline, various upcoming decision-making processes could be delayed.

According to the Taeyoung Construction creditors on the 26th, among the 60 Taeyoung Construction PF project sites, except for the Magok CP4 block site, the formulation of normalization plans for the remaining sites is undergoing last-minute difficulties. It is reported that many of the 59 sites required to submit normalization plans by this day had not submitted their handling plans by the previous day.

Given the sharp conflicts of interest at each site, there is speculation that many sites may fail to meet the deadline. Only about 10 sites have submitted normalization plans, and among the 59 sites, 18 bridge loan projects face a situation where some creditors may find it difficult to recover the principal.

The major creditors of individual PF project sites must consider various conditions depending on the construction status. They must decide whether to proceed with the project while retaining the existing contractor, and if proceeding, who and how to secure additional funds. Since subordinate creditors would effectively have to accept losses if the sites are liquidated through auction or public sale, the agreement process is not straightforward.

Amid significant concerns about the normalization plans for each site, the Korea Development Bank (KDB), the Industrial Bank of Korea, does not plan to extend the deadline further, judging that there is no benefit in doing so. A KDB Industrial Bank official, the main creditor bank, explained, "There is no institutional penalty for not submitting the normalization plan by the deadline on the 26th, but the longer the delay, the higher the costs, so we are requesting submission by the deadline."

Previously, among the 60 PF project sites, the major creditors of the Magok CP4 site were the first to decide on new funding support and submitted the handling plan to the Industrial Bank. This project involves constructing a complex facility called 'One West Seoul' with a total floor area of approximately 460,000 square meters in the Magok CP4 district, requiring an additional 370 billion KRW in funding for completion.

So far, major creditors including Shinhan Bank, Kyobo Life Insurance, and the Industrial Bank have agreed on the direction of additional funding support, given the project's viability, and discussed detailed support plans. However, they failed to reach an agreement on how to share the 370 billion KRW. Later, Shinhan Bank announced it would bear the share of the new investment corresponding to the portion of creditors unable to participate, leading to an agreement on the handling plan. The interest rate was also lowered by 1 percentage point from the 9.5% originally demanded by the creditors to 8.5%.

A creditor official explained, "This means Shinhan Bank has prepared a backup plan to support new funding for the project site," adding, "Most of the investments are expected to be made to maintain seniority."

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