Taeyoung PF Project Site 'Action Plan' Submission Delayed Again... KDB "Continued Encouragement"

Taeyoung Construction, which is experiencing a liquidity crisis due to real estate project financing (PF), has applied for workout, and the construction site of Taeyoung Construction's Seongsu-dong development project located in Seongdong-gu, Seoul, has come to a halt. Photo by Jinhyung Kang aymsdream@

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Taeyoung Construction, which has entered the workout (corporate financial restructuring) process, has failed to submit resolution plans by the previously announced deadline of the 26th for many of its project financing (PF) sites. The creditor groups for each PF site have been discussing since January whether to halt the projects, but despite one extension of the submission deadline, they are reportedly struggling to reach an agreement.

According to the financial sector on the 27th, out of 59 sites excluding the CP4 project in the Magok Urban Development District, Gangseo-gu, Seoul, which decided to continue the project, only creditor groups for about 30 to 40 sites have submitted resolution plans to the main creditor bank, KDB Industrial Bank. Initially, the PF creditor groups had agreed to submit resolution plans by the 10th, but due to complex interests, the deadline was extended to the 26th. However, many PF sites failed to agree on resolution plans and missed the deadline.

An official from KDB Industrial Bank stated, "Although the deadline has passed, we plan to receive additional resolution plans," adding, "We are encouraging the remaining PF sites to promptly submit their resolution plans."

Taeyoung Construction’s PF sites total 60, including 42 at the main PF stage and 18 at the bridge loan stage. For bridge loan stage sites, if construction is halted and the project land is auctioned or sold publicly, subordinate and junior creditors are inevitably expected to incur losses. Additionally, some sites that have not yet started construction may decide to halt work, which cannot be ruled out.

A banking sector official explained, "About one-third of the projects with significant construction progress have yet to reach an agreement on resolution plans," adding, "Large-scale projects are in additional negotiation stages with Taeyoung Construction, but others are facing difficulties in proceeding."

If the submission of resolution plans for PF sites is further delayed, it could also affect the asset and liability due diligence schedule for Taeyoung Construction, which is being conducted by Samil Accounting Corporation. KDB Industrial Bank planned to complete the due diligence results on Taeyoung Construction’s assets and liabilities by March and use these results to establish a corporate improvement plan. Once the corporate improvement plan is established, the main creditor group, including KDB Industrial Bank, planned to hold an additional creditor meeting on April 11 to decide whether to accept the plan.

Meanwhile, financial authorities plan to finalize next month a business feasibility evaluation plan for about 3,500 real estate PF sites nationwide. Based on the evaluation criteria, these projects will be classified as favorable, normal, or at risk of deterioration. In particular, stricter standards will be applied to projects at the bridge loan stage to preemptively prevent risk spread.

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