Failed to Secure 300 Billion Bridge Loan for Intermediate Payment
No One Steps Up for Subordinated Loan Guarantee
Mirae Asset, Gil Hospital, Hoban Construction Lose 32 Billion Deposit
The large-scale medical complex town project in Wirye New Town, which was being promoted by a consortium including Gachon University Gil Medical Foundation, Hoban Construction, and Mirae Asset Securities, has ultimately fallen through. The consortium attempted to secure bridge loans to pay the interim land purchase payment, but due to the deterioration of the project financing (PF) market and medical service gaps, the loan recruitment was not finalized. Approximately 32 billion KRW of the land purchase deposit paid to Seoul Housing and Communities Corporation (SH Corporation) at the time of the land sale contract was forfeited.
According to the investment banking (IB) industry on the 28th, the Gil Hospital and Mirae Asset consortium ultimately failed to pay the interim land purchase payment to SH Corporation. Although they had been recruiting a lending syndicate to provide funds for the land purchase with Mirae Asset Securities as the lead manager, the financing was not successful. They had arranged to borrow 260 billion KRW in senior loans through bank-affiliated credit finance companies, but the entire loan recruitment failed because they could not raise the 45 billion KRW subordinated loan separately recruited under the lead of Mirae Asset Securities.
The bridge loan fell through because no one provided guarantees (credit support) for the subordinated loan. Mirae Asset, the lead manager, requested Hoban Construction, the project owner and contractor, to provide a payment guarantee, but Hoban refused, citing concerns over potential defaults. Gil Hospital considered financial investment but withdrew due to worsening liquidity caused by medical service gaps. Woori Investment & Securities (formerly Woori Comprehensive Financial) expressed willingness to lend without guarantees, but this also ultimately did not materialize.
The consortium planned to repay the loan borrowed through this bridge loan for the first interim payment and also pay the second interim payment. However, due to the failure in securing funds, they failed to repay the loan and could not pay the overdue interim payments within the deadline. Consequently, the 32 billion KRW deposit paid to SH Corporation was forfeited. An IB industry official stated, "When signing a land purchase contract with SH Corporation, if the interim payment is not made, the paid interim payment is refunded, but the deposit is forfeited by SH Corporation due to contract non-fulfillment." He added, "The consortium received the deposit back according to the agreement, but it will be difficult for the contractors such as Gil Hospital and Hoban Construction to recover it under the contract terms."
The Wirye Medical Complex Town is a large hospital complex equipped with state-of-the-art medical systems, being developed by SH Corporation on a 44,004㎡ site in Geoyeo-dong 272 area, Songpa-gu, Seoul. In May 2021, SH Corporation selected a consortium consisting of five companies?Mirae Asset, Gil Medical Foundation, Hoban Construction, Together Holdings, and LandMe?as the preferred negotiator. In July, the consortium invested 5 billion KRW in capital to establish a special purpose company (SPC) for the project called ‘Wirye Medical Complex PFV.’ The PFV’s shareholders are Together Holdings (39.1%), Mirae Asset Securities (17%), Hoban Construction (17%), Gil Medical Foundation (16.9%), and LandMe (10%).
To resume the project, SH Corporation must select a new developer and resell the project site. However, with the PF market unstable and liquidity conditions for large hospitals poor due to medical service gaps caused by political conflicts, the prospects for restarting the project are uncertain. An industry insider said, "In the current unstable PF market, it will not be easy to find a developer to win the bid for the site and proceed with the medical complex town project," adding, "With the development market shrinking and medical service gaps overlapping, the massive Wirye medical complex town project has become uncertain."
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