[Exclusive] Taeyoung's Golf Course Operator Said to Be Sold... Suspected 'Nominal Sale Parking Transaction'

Yongin and Sangju Blue One CC Sold for 260 Billion Won and Re-Leased
Acquisition Fund Reinvests 100% of Common Shares...Maintains Management Rights
Also Holds 'Right of First Refusal' to Repurchase Golf Courses
Creditors Criticize as "Collateral Loan, Not a Real Sale"

Taeyoung Group will sell two golf courses, which it decided to sell as a condition of Taeyoung Construction's workout (corporate financial restructuring), to a fund established by Mark Asset Management. Even after the sale, Taeyoung will retain management rights of the golf courses and hold a 'call option' to repurchase the golf courses in the future. Because of this, there are criticisms that this is less of a sale and more of a 'golf course collateral loan' or a kind of 'parking transaction' that is merely a nominal sale.

The day after Taeyoung Construction's workout was decided, on the 12th, people were entering and exiting the Taeyoung Construction headquarters building. Photo by Heo Younghan younghan@

Sold to Mark Asset Management Fund for 260 billion KRW... Golf Course Ownership and Operation Rights Remain Unchanged

According to the investment banking (IB) industry on the 19th, Blueone, an affiliate of Taeyoung Group, has decided to sell Blueone Yongin CC and Sangju CC in bulk to a private equity fund established by Mark Asset Management. The sale price of the two golf courses is reported to be around 260 billion KRW. After the sale, Blueone will lease back the golf courses (sale and leaseback) and continue to use them.

The acquisition funds will be raised by Mark Asset Management through collateral loans and stock issuance. They plan to secure acquisition funds by obtaining a collateral loan of 182 billion KRW using the golf courses as collateral, issuing 35 billion KRW in preferred shares, and 40 billion KRW in common shares. Mark Asset Management has distributed investment memorandums (IM) to various institutional investors to raise funds.

However, it has been confirmed that Blueone, the seller of the golf courses, will reinvest 40 billion KRW in common shares of the fund. This means Blueone will maintain ownership and management rights of the golf courses held within the fund. Additionally, Blueone holds a right of first refusal (call option) to repurchase the golf courses at the fund’s maturity.

The creditors point out that this transaction is a 'parking transaction' rather than a sale. Parking refers to a contract that disguises the sale of corporate management rights but involves reclaiming them after a certain period. Although it appears to be a sale, it reveals that there is no real intention to sell the golf courses within the sale structure.

An IB industry insider said, "If Taeyoung genuinely sold the two golf courses (a bona fide sale), they could have received a higher price than transferring them to the fund, and Taeyoung Group would not have had to reinvest 40 billion KRW in common shares, thereby securing much more funds. This transaction is more like a golf course collateral loan than a sale," he pointed out.

There is also an assessment that Taeyoung Group selected Mark Asset Management as the buyer of the golf courses to facilitate a parking transaction. An industry insider remarked, "It seems Taeyoung Group structured a parking-type sale and borrowed a fund from a small securities firm to secure urgent funds for the time being."

Creditors Doubt Taeyoung Group’s Willingness to Sincerely Implement Self-Rescue Measures

Because of this, there is growing suspicion within the creditors about whether Taeyoung Group genuinely intends to implement its self-rescue plan. During the workout initiation process, Taeyoung Group pledged to support Taeyoung Construction by selling three prime golf course assets, the environmental company 'Ecobit' co-owned with Kohlberg Kravis Roberts (KKR), and by securing a collateral loan on SBS shares.

A creditor commented, "If suspicions arise about parking transactions from the early stages of implementing the self-rescue plan, can we believe that complex transactions such as the sale of Ecobit or the collateral loan on SBS shares will be faithfully executed?" expressing dissatisfaction with this transaction.

There are also concerns about whether the funds borrowed using the golf courses as collateral will be fully used to support Taeyoung Construction. A financial company official evaluated, "Just as the funds from the sale of Taeyoung Industry were used to support TY Holdings, it is hard to believe that all funds raised from this golf course collateral loan will be used solely to support Taeyoung Construction."

Another official said, "If suspicions within the creditors about Taeyoung Group’s implementation of the self-rescue plan accumulate, the risk of the workout being halted increases accordingly. It is necessary to build trust through sincere execution of the self-rescue plan rather than just words."

In response, a TY Holdings official said, "This is one of the methods to monetize the golf courses disclosed in the creditors’ self-rescue plan, proceeding with asset securitization through a real estate fund. To provide funds to Taeyoung Construction quickly, we chose securitization, which can be completed in two months, rather than a sale that takes more than six months." He added, "A call option is necessary to attract investors. This is not a parking transaction, and any funds received in any form will be fully paid to Taeyoung Construction."

Meanwhile, KDB Industrial Bank plans to soon finalize the selection of an accounting firm to conduct asset and liability due diligence on Taeyoung Construction and begin full-scale due diligence. If a corporate improvement plan is established during the three-month due diligence process, a second financial creditors’ meeting will be convened on April 10 to proceed with the workout resolution process.