Taeyoung Construction, Stock Trading Halted from Tomorrow... No Impact on Workout

Capital Impairment Announced on 13th, Trading Suspended per Regulations
IBK Industrial Bank: "No Impact on Workout Progress"
Trading to Resume Once Workout Conditions Are Met

Taeyoung Construction, which is undergoing a workout (corporate restructuring process), will have its stock trading suspended on the KOSPI market starting from the 14th due to capital erosion.

[Image source=Yonhap News]

On the 13th, Taeyoung Construction disclosed that its total equity as of the end of last year was -562.6 billion KRW. This means the company is in a state of capital erosion as its liabilities (5.8429 trillion KRW) exceed its assets (5.2803 trillion KRW). In the disclosure, Taeyoung Construction stated, "We have reflected the expected losses from real estate project financing (PF) sites due to the commencement of joint management procedures." This is described as an unavoidable result of the ongoing workout process.

When capital erosion occurs, stock trading is immediately suspended in accordance with the KOSPI market disclosure regulations (Article 40). Accordingly, trading of Taeyoung Construction’s shares will be halted. If the delisting conditions are resolved through capital increase within the improvement period granted by the Korea Exchange (up to one year from the date of granting the improvement period) as part of the workout implementation, the company may maintain its listing and resume trading after a review process by the Korea Exchange.

Taeyoung Construction reclassified debts expected to result in losses from guarantees on PF projects, previously classified as contingent liabilities, as principal debts. In addition, parts of the assets related to PF construction projects that are expected to be difficult to recover were impaired, resulting in substantial losses. As a result, the company reached a state of capital erosion.

KDB Industrial Bank, the main creditor bank of Taeyoung Construction, stated, "This is a common occurrence during the workout process. Even if Taeyoung Construction falls under capital erosion, trading suspension, and delisting reasons, it does not affect the normal progress of the workout." The bank added, "Since deciding to commence the workout for Taeyoung Construction, the creditors’ council has selected an audit firm to conduct due diligence on all management aspects of Taeyoung Construction, including PF projects."

The audit firm is reviewing all contingent liabilities and potential losses, including those disclosed by Taeyoung Construction. In some projects, losses are expected related to guarantee debts provided by Taeyoung Construction for PF loans, and some of the assets already invested may be difficult to recover. Based on the due diligence results conducted by the audit firm, the creditors’ council plans to evaluate the feasibility of Taeyoung Construction’s normalization.

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