Taeyoung Construction Injects 400 Billion Won in 'New Money'... Asset Securitization of Two Golf Courses

Creditors Resolve to Repay 45.1 Billion Won in Unpaid Foreign Currency Loans... Lifeline for Partner Companies
Taeyoung Group Secures 140 Billion Won Through Asset Securitization of Yongin CC and Sangju CC

On the 11th, tension is running high at Taeyoung Construction in Yeongdeungpo-gu, Seoul, as the fate of Taeyoung Construction, which applied for a workout (corporate restructuring) after failing to repay real estate project financing (PF) loans worth around 9 trillion won, is being decided. Photo by Jo Yongjun jun21@

The creditors of Taeyoung Construction have decided to provide new funding of 400 billion KRW and to make an early repayment of the outstanding accounts receivable-backed loans (ARBL).

On the 23rd, the Korea Development Bank announced that the agenda of the 2nd Financial Creditors' Council, which was submitted on the 15th, received approval from more than 75% of the financial creditors as of 6 p.m. on the same day, meeting the approval requirements. With all proposals passed, the creditors are moving forward with a plan to support Taeyoung Construction with a credit line of 400 billion KRW. This is to address Taeyoung Construction's funding shortfall and support its business activities until a corporate improvement plan is established.

It was also decided to repay the outstanding ARBL. Taeyoung Construction's 45.1 billion KRW ARBL will be repaid immediately, enabling partner companies to secure liquidity. The Korea Development Bank stated, "Alongside the creditors' new funding support, the Taeyoung Group is also proceeding with self-help plans such as asset securitization of Blue One," adding, "Funds procured through the self-help plan by the end of February will be lent to Taeyoung Construction." The bank plans to continuously monitor the Taeyoung Group to ensure faithful implementation of the self-help plan.

Regarding the delay in handling Taeyoung Construction's project financing (PF) sites, the bank explained, "Since the progress and creditor group composition vary by project site, delays have occurred compared to the original schedule, but most projects are expected to submit handling plans to the main creditor bank by the end of February," and added, "The audit firm for Taeyoung Construction will conduct due diligence reflecting these handling plans."

[Image source=Yonhap News]

Earlier, TY Holdings, the holding company of the Taeyoung Group, raised 140 billion KRW through asset securitization of two golf courses owned by its affiliate Blue One. Of the 200 billion KRW secured through asset securitization of Blue One's Yongin Country Club (CC) and Sangju CC, 60 billion KRW was used to repay loans on Yongin CC, resulting in a net inflow of 140 billion KRW to TY Holdings.

This asset securitization of the two golf courses is part of the self-help plan submitted by Taeyoung Construction at the time of its workout application, and the funds will be used as operating capital, including payments to partner companies. It is known that the mid-sized construction company Hallim Construction invested in the two golf courses. Hallim Construction paid TY Holdings a lease deposit of 200 billion KRW for the two golf courses and subleased them to Blue One, allowing Blue One to continue operating the golf courses under a 'Sales & Lease Back' arrangement. The maturity is three years.

Regarding this transaction structure, TY Holdings explained, "It was considered that it would be difficult to raise funds quickly due to the time required for sale," and added, "The unfavorable sales conditions, such as a significant drop in the price per golf hole, were also taken into account."