[Column] Taeyoung Should Cut Its Own Flesh More, Not Others'

After Presidential Office Intervention, New Amendment Drafted
Founder's Holding Company Stake Valued at Approximately 1.1 Billion
Insufficient to Demonstrate Commitment to Corporate Normalization
Forced Implementation of Major Shareholder's Loss-Sharing Principle

"Only after pressure from the Presidential Office did they agree to pledge the owner's family shares as collateral, but this is not voluntary. It is still insufficient."

After the financial authorities and creditors completed discussions on the new self-rescue plan of Taeyoung Construction on the morning of the 8th, such harsh criticism emerged from the creditors. In the early hours of the day, Taeyoung Group informed the creditors that it would support Taeyoung Construction with the full proceeds (154.9 billion KRW) from the sale of Taeyoung Industry and provide the shares of TY Holdings held by founder Yoon as collateral.

Taeyoung Construction is expected to officially announce this new self-rescue plan this afternoon. However, there remains a lack of trust toward Taeyoung Construction within the creditor group. One creditor official said, "We are not yet confident that Taeyoung Construction will truly make the announcement."

The principle of restructuring is "voluntary loss-sharing by stakeholders." Creditors have always emphasized the loss-sharing of major shareholders before deciding to initiate a workout (corporate financial restructuring). This is natural. Once a workout begins, creditors also bear losses to save the company, and innocent employees suffer damage.

Creditors extend loan maturities amid uncertainty, defer interest payments, participate in new loans and capital increases to cover funding shortages. Employee sacrifices are inevitable. If lucky, it only results in salary cuts. Most face forced restructuring through early retirement. This is why creditors repeatedly stress the principle of "loss-sharing" such as personal fund contributions and share pledges from the major shareholder owner family before starting a workout.

There are no exceptions. Former Kumho Group Chairman Park Sam-gu, who had a rough relationship with the main creditor Korea Development Bank, even pledged his ancestral land as collateral. When he showed determination to restore the company, creditors fully supported him. In the case of Doosan Group, they pledged shares of all affiliates beyond creditors’ expectations. Regardless of the noise during restructuring, they ultimately decided on voluntary loss-sharing.

Even if Taeyoung Group submits a new self-rescue plan this afternoon, both its content and form are expected to be only half measures. Founder Yoon’s TY Holdings shareholding ratio is 0.5% (266,955 shares). The amount of funds requested by creditors is 89 billion KRW, but the value of the pledged shares is only 1.1 billion KRW. This is despite the unusual pressure from the Presidential Office.

The creditors are not yet certain whether the major shareholder, Chairman Yoon Seok-min, will pledge his TY Holdings shares as collateral. Chairman Yoon’s TY Holdings shareholding ratio is 25.4% (12,827,810 shares), with a share value of about 58 billion KRW. For smooth restructuring, Taeyoung Construction must present a self-rescue plan that "cuts its own flesh rather than someone else’s."