One Month After Creditors' Resolution of 'Corporate Improvement Plan'
Management Goals and Implementation Plans Expected Based on Improvement Plan
'Joint Management Procedure' After Agreement Signing... Workout to Begin in Earnest
Taeyoung Construction, which has entered the workout (corporate financial restructuring) process, will sign an agreement with the creditor group, including the main creditor bank, Korea Development Bank, by the end of this month to implement the 'Corporate Improvement Plan.' Since the Corporate Improvement Plan was approved at the Financial Creditors' Council last month, if no unforeseen variables arise, it is expected that the formal joint management process will begin simultaneously with the signing of the agreement.
According to the financial sector on the 22nd, Korea Development Bank, the main creditor bank, and Taeyoung Construction have completed practical consultations related to establishing Key Performance Indicators (KPI) that include management goals and implementation plans, and are planning to sign the implementation agreement (MOU) on the 30th.
A representative from TY Holdings said, "The signing of the implementation agreement, the final step before entering the joint management process, is scheduled for the 30th," adding, "Currently, the creditor group and Taeyoung Construction are in the practical stage of establishing KPIs and preparing the agreement."
The agreement document will include management goals and implementation plans based on the Corporate Improvement Plan approved at the 3rd Creditors' Council held last month. Taeyoung Construction plans to reduce the shares held by major shareholders such as TY Holdings by a ratio of 100 to 1, convert 400 billion KRW of pre-workout loans 100% into equity, and convert all 334.9 billion KRW of loans made after the workout into perpetual bonds. Additionally, the company plans to reduce the number of executives by 22, including founding Chairman Yoon Se-young and Chairman Yoon Seok-min, and continue self-help efforts such as cutting salaries by up to 35%.
Most issues that could hinder Taeyoung Construction's workout process have been resolved. Regarding new funds required for the completion of one of its largest projects, the 'Magok CP4' site, the project financing (PF) consortium, including Shinhan Bank, Kyobo Life Insurance, KB Kookmin Bank, IBK Industrial Bank, and Korea Development Bank, recently reached an agreement to inject 370 billion KRW (at an 8% interest rate) on the 27th.
The issue raised by Woori Bank, which argued that the joint debt moratorium of TY Holdings, the major shareholder of Taeyoung Construction, was unfair, has also been settled for now. The Financial Creditors' Adjustment Committee recommended a 'conditional moratorium' that allows a three-year deferment of TY Holdings' joint debt, with a clause enabling immediate repayment if debt preservation measures become difficult. Last month, before the Corporate Improvement Plan resolution, Woori Bank requested that the agenda be excluded from the plan, arguing that TY Holdings and Taeyoung Construction are separate companies.
A financial sector official said, "Most issues that could affect the workout process have been resolved," adding, "The main creditor group, including Korea Development Bank, is also evaluating that Taeyoung Construction is managing the process exemplary."
After signing the Corporate Improvement Plan implementation agreement with Korea Development Bank on the 30th, Taeyoung Construction plans to hold a bondholders' meeting on July 11 at the Taeyoung Building in Yeongdeungpo-gu, Seoul, to discuss bond equity conversion and maturity extension. This meeting targets the 68th public bondholders, including individual investors who could not participate in the previous Financial Creditors' Council. The meeting will discuss changes to bond maturity dates and interest rates, as well as converting 50% of the bond principal into equity.
A Taeyoung Construction official explained, "This is a session to explain to individual investors and other bondholders to ensure smooth business normalization," adding, "It is a procedure that requires the cooperation of investors."
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