Government Urges Taeyoung Construction's Self-Help Measures... "Hard to Discuss Support Without Effort"
Prime Minister Han Duck-soo: "Management Must Endure Painful Self-Sacrifice"
Major Creditor KDB to Convene Creditors' Meeting on 11th to Decide Workout
As Taeyoung Construction faces a critical juncture in its workout process, the Presidential Office has also urged the company to promptly implement self-rescue efforts. Attention is focused on whether measures that can overturn the authorities' and creditors' assessment that "only others are bearing the burden" will emerge.
On the 7th, a Presidential Office official stated, "There is no change in the government's existing position that (Taeyoung Construction's) self-rescue efforts must come first," adding, "Without efforts, it will be difficult for the government to discuss support directions."
According to related industries, financial authorities and Taeyoung Construction's creditors are waiting for additional changes in the company's self-rescue efforts, setting this weekend as a de facto deadline. However, Taeyoung has not presented alternatives in response to the financial authorities' and creditors' demands for additional self-rescue plans. The creditors indicated that if no additional self-rescue plan is presented by the 11th, when the first creditors' meeting is held, it will be difficult to obtain the 75% consent required to initiate the workout.
According to KDB Industrial Bank, the main creditor bank, Taeyoung initially proposed four self-rescue plans: ▲supporting Taeyoung Construction with the sale proceeds of Taeyoung Industry (154.9 billion KRW), ▲promoting the sale of Ecobit and supporting Taeyoung Construction with the sale proceeds, ▲providing shares of Blueone as collateral and promoting their sale, and ▲providing 62.5% of Pyeongtaek Silo shares as collateral.
However, the creditors maintain that the demand to support Taeyoung Construction by selling shares held by the major shareholder family and the holding company has not been properly fulfilled. The cash held by the holding company and the major shareholder family from the sale of Taeyoung Industry amounts to 206.2 billion KRW: 113.3 billion KRW for TY Holdings, 41.6 billion KRW for Yoon Seok-min, Chairman of Taeyoung Group, and 51.3 billion KRW for Yoon Jae-yeon, Blueone CEO and younger sister of Chairman Yoon. Yoon Jae-yeon's share was excluded on the grounds that she has no management responsibility.
In this situation, on the 5th, Kim Ju-hyun, Chairman of the Financial Services Commission, told reporters, "The basic point for starting a workout is that the creditors believe 'the major shareholder is sincerely trying to save the company,'" adding, "Since there is not much time left, it is now time to reach an agreement." Lee Bok-hyun, Governor of the Financial Supervisory Service, also stated, "I have been informed that if the period around this weekend passes, it will be practically difficult for the Industrial Bank to persuade the creditors."
Prime Minister Han Duck-soo also pressured, saying, "Managers must endure the painful process of cutting their own flesh and blood." Appearing on KBS Sunday Diagnosis Live that morning, Prime Minister Han said, "Restructuring or workouts inevitably take the form of support such as creditors deferring principal and interest repayments," adding, "Management must take responsibility." He emphasized, "From the perspective of financial institutions that naturally need to recover the lent money, managers must make painful efforts so that a national consensus of 'Ah, that level of effort makes it inevitable' can be reached." Furthermore, Prime Minister Han predicted that despite the Taeyoung Construction incident, the real estate project financing (PF) issue would not lead to a systemic crisis.
The main creditor bank, Industrial Bank, will convene the first creditors' meeting on the 11th to decide whether to initiate the workout.
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