Taeyoung, on the Resolution of the Corporate Improvement Plan, "Prompt Management Normalization"

PF Restructuring Draws Maximum Attention
Subsidiary Sale Failures and Workplace Closures Expected to Accelerate

With the creditor committee's corporate improvement plan for Taeyoung Construction, which is undergoing a workout (corporate financial restructuring) process, being approved on the 30th, attention is also focused on Taeyoung Construction's sale of affiliates and the liquidation of real estate project financing (PF) sites to normalize management.

Following the approval of the corporate improvement plan, Taeyoung Construction stated, "To meet the expectations of the creditors who agreed to the Taeyoung Construction corporate improvement plan, we will diligently prepare the special agreement (MOU) and promptly achieve management normalization to ensure smooth construction progress and occupancy without any setbacks." They also added, "We will improve our financial structure through capital expansion and make every effort to resume stock trading as soon as possible so that general investors can feel reassured."

The greatest interest lies in how the real estate PF sites will be liquidated. In the corporate improvement plan disclosed by the main creditor bank, Korea Development Bank, at the financial creditors' briefing on the 18th, based on due diligence results, out of 40 main PF sites and 20 bridge loan PF sites, 10 were designated for liquidation and 17 for contractor replacement. It was concluded that 'business withdrawal' is necessary at 27 out of the total 60 sites. Among the main PF sites, 32 (4 of which are completed) and 1 bridge loan PF site will continue as planned.

Challenges are expected during the liquidation process. In the case of the Gumi Kkotdongsan development project (Gumi Grand Foret Desiang), which the creditors decided to liquidate among the main PF sites, some major shareholders who provided real estate PF funds are demanding the continuation of the project. Shareholders opposing liquidation reportedly request the resumption of the project through a re-sale method later, citing that the loss burden would increase if the entire debt is written off. Taeyoung Construction's largest PF project, Magok CP4, is facing difficulties in proceeding as the agreement on a 370 billion KRW loan failed during the re-initiation of construction.

The failure to conclude the agreement stems from IRDV, which holds the largest stake (45%) in Magok CP4 PFV, the project company established for the Magok CP4 development, claiming that due to Taeyoung Construction's workout, construction was delayed and that Taeyoung Construction should bear the entire loss of 18 billion KRW incurred. Taeyoung Construction, on the other hand, insists that the four project companies, including itself, should share the burden according to their shareholding ratios. With both sides firmly holding their positions, difficulties in continuing the project are anticipated. Furthermore, Taeyoung Construction is placing weight on continuing projects classified as liquidation targets through contractor replacement and other measures based on due diligence results.

Attention is also on whether the sale of Taeyoung Construction's affiliates will accelerate. Even before the workout began, Taeyoung Construction had been pursuing the sale of Ecobit, a leading company ranked first or second in the medical, industrial, and household waste treatment sectors.

It is reported that Taeyoung Construction recently sent investment prospectuses to prospective buyers and plans to conduct bidding next month, suggesting that the sale of Ecobit, estimated at around 3 trillion KRW, is imminent.

Taeyoung Construction expects its liquidity capacity to increase once the sale proceeds are received. It is also expected to push for the sale of Luna X CC, a golf course located in Gyeongju owned by its tourism and leisure affiliate Blue One. Earlier, on the 24th, Blue One sold another golf course, The Dyanes CC, along with nearby condos and a water park, to the Gangdong Group for the mid-300 billion KRW range. Taeyoung Group initially intended to sell Luna X CC together but failed, and now plans to pursue a separate sale. The sale price of Luna X CC is being discussed at around 150 billion KRW.

A self-rescue plan focusing on executive reductions and salary cuts is also expected to be implemented. Previously, Taeyoung Construction proposed a cost-cutting plan that included reducing 22 executives, including the dismissal of founding Chairman Yoon Se-young and Chairman Yoon Seok-min. Both chairmen have already stepped down from their director positions.

Salary cuts have also been decided. Salaries will be reduced by 35% for presidents and above, 30% for vice presidents, 20% for executive directors, 15% for managing directors, and 10% for assistant managing directors, while employee salaries will be frozen until 2026. For 93 idle personnel due to site reductions, job standby measures will be implemented.

Through these self-rescue measures, Taeyoung Construction plans to reduce selling and administrative expenses (S&A expenses) from 126.4 billion KRW last year to 96.9 billion KRW this year. Labor costs are also expected to decrease from 45.7 billion KRW last year to 38.2 billion KRW this year.