Facing a 205 Billion Won Debt Paid with Taxpayer Money... Gangwon-do Applies for 'Jungdo Development Corporation Court Receivership'

Jungdo Development Corporation's Unfair 100-Year Free Lease Contract for Legoland Theme Park Site
20.5 Billion Won Loan from BNK Investment & Securities for Legoland Infrastructure Development

Gangwon Province Governor Kim Jin-tae held a press conference on the 28th and announced the plan to file for rehabilitation of the Jungdo Development Corporation (GJC). Photo by Ra Young-cheol

[Asia Economy Reporter La Young-cheol] Gangwon Province has decided to file for court receivership (rehabilitation) for Jungdo Development Corporation (GJC), which was in charge of the Chuncheon Legoland Theme Park infrastructure project, amid ongoing controversies over unfair contracts.

On the 28th, Gangwon Governor Kim Jin-tae held a press conference and stated, "The purpose of this rehabilitation application is to prevent the situation where Gangwon Jungdo Development Corporation has to repay the 205 billion won borrowed from BNK Investment & Securities on behalf of the province, thereby relieving the guarantee burden."

According to the province, when GJC, a province-invested company, borrowed 205 billion won from BNK Investment & Securities to build Legoland infrastructure, the province provided a debt guarantee.

However, GJC, which has faced severe management difficulties since the early stages of the project amid criticisms of unfair contracts such as a 100-year free lease of the theme park site, will put the province in a position where it must repay the loan with taxpayers' money if it fails to repay by the loan maturity in November next year.

If the court accepts the rehabilitation plan filed by the province, a new manager appointed by the court will proceed with asset sales.

Contracts with GJC that have not completed final payments will be canceled, and contractors will only receive their deposits and interim payments back. Opposition from creditors is also expected during this process.

Governor Kim said, "Despite Legoland being an unfair contract structure where all profits go to foreign companies, Gangwon Province has had no choice but to be dragged along," adding, "We hope the operating Legoland does well, but Gangwon Province, burdened with debt, will also seek an exit strategy."

He further emphasized, "What remains for GJC is only to properly sell the remaining assets. If the court manager or a new acquirer sells the assets at their proper value, the loan can be fully repaid. We must ensure that even the sales process is conducted properly."

Even if the province enters rehabilitation procedures, it is currently uncertain whether it can clear the debt by selling assets at their proper value on time, as the guarantee debt burden will not be lifted.

GJC, which owns 44% of Legoland shares, currently holds provincial land assets around Uiamho Lake totaling 417,000㎡ (approximately 370 billion won). Of this, 360,000㎡ has been sold, leaving 57,000㎡ (14%) remaining.

The province plans to halt all ongoing provincial land sale procedures while preparing the rehabilitation application, and expects a court decision around April to July next year after filing for GJC's rehabilitation next month.