Gangwon Province, "Withdrawal of Policy to File for Rehabilitation of Gangwon Jungdo Development Corporation (GJC)"

"Changes in Debt Repayment Conditions... Exploring Plans to Recover 205 Billion Won in Claims"
GJC Appoints Kim Jun-woo as New CEO... Seeking Independent Management Normalization
Province Orders "GJC to Submit Data Faithfully and Take Measures to Preserve Cultural Assets" to Resolve Issues

Kwang-Yeol Jeong, Deputy Governor for Economic Affairs of Gangwon Province, held a press conference at the Gangwon Provincial Office on the 15th and stated, "After reconsideration, Gangwon Province has decided not to apply for corporate rehabilitation for GJC." [Gangwon Province]

[Asia Economy Reporter La Youngcheol] Gangwon Province has withdrawn its plan to pursue corporate rehabilitation for Gangwon Jungdo Development Corporation (GJC), which triggered the so-called 'Legoland-induced financial crisis.'

On the 15th, Jeong Gwang-yeol, Deputy Governor for Economic Affairs of Gangwon Province, held a press conference at the Gangwon Provincial Office and announced, "Gangwon Province has decided not to apply for GJC's corporate rehabilitation."

He added, "After gathering opinions from the Provincial Council, related experts, and civil society from various sectors, we decided not to file for rehabilitation," and "This decision was influenced by various changes in circumstances and conditions since the initial announcement of the rehabilitation application plan on September 28."

The province judged that, having fully repaid the 205 billion KRW guaranteed debt on the 12th, and with the management innovation agreement between Merlin Company and GJC, a foundation for independent management normalization has been established.

Moreover, despite the positive expected effects of corporate rehabilitation, concerns about rehabilitation grew in the market, so the province also explored various recovery measures, including the 205 billion KRW claim from GJC, even without going through rehabilitation.

Regarding the 205 billion KRW claim recovery plan, the province stated, "We will proceed by securing management transparency," and reassured concerns about reduced profits from land sales due to the withdrawal of the rehabilitation application by saying, "Although land sales may be limited, policies must consider market conditions and timing."

On the same day, the province and GJC held a shareholders' meeting in the morning and newly appointed Kim Jun-woo as the CEO, succeeding former CEO Song Sang-ik who recently resigned. Kim previously served as the Administrative Director and Economic Director of Chuncheon City, as well as President of Chuncheon Urban Corporation.

The province expects management normalization through organizational changes at GJC centered on the new CEO Kim Jun-woo and ordered him to repay as much as possible the 205 billion KRW guaranteed debt that the province repaid on GJC's behalf.

They emphasized resolving suspicions related to GJC, faithfully submitting all requested documents by the province, and promptly addressing pending issues such as unpaid public corporation fees and cultural heritage preservation measures.

The background for appointing CEO Kim was explained as "a long experience as a Chuncheon City official, expertise in urban development, and suitability for cooperation with administration," and that "the decision was made based on economic logic, not political reasons."

When asked if there was a request from Merlin to withdraw the rehabilitation, he replied, "There was none," and added, "We are communicating well with John Jakobsen, President of Merlin Entertainment Legoland Resort Group, on practical matters."

Deputy Governor Jeong Gwang-yeol said, "We will strive to make Hajungdo tourist site a charming tourism resource of Gangwon Province."

Previously, the province had guaranteed the debt when GJC issued asset-backed commercial paper (ABCP) worth 205 billion KRW through BNK Investment & Securities in 2020 to promote the Legoland theme park project.

On September 28, Governor Kim Jin-tae announced, "We decided to apply for rehabilitation to prevent the situation where GJC would repay the 205 billion KRW borrowed from BNK Investment & Securities on its behalf."

Subsequently, the market perceived this as a default, causing a liquidity crunch in the financial market. Governor Kim advanced the repayment date of the guaranteed debt from January 29 next year to December 15 this year, prepared a supplementary budget, and fully repaid it on the 12th.