Taeyoung Construction Holds Consecutive Extraordinary General Meeting and Board Meeting... Workout Gains Momentum
Bondholders' Meeting for Individual Corporate Bond Investors Also Held... Corporate Bond Extension Plan Approved
Taeyoung Construction has taken the first step in implementing its self-rescue plan, including a 100-to-1 capital reduction of existing shares held by the parent company and conversion of loans into equity, following the signing of an agreement to carry out the corporate improvement plan. Additionally, the bondholders' meeting held for individual investors to extend corporate bonds was completed as scheduled.
According to the main creditor bank, Korea Development Bank, on the 11th, Taeyoung Construction held an extraordinary general meeting of shareholders at its headquarters in Yeouido, Seoul, and approved the agenda for a 100-to-1 capital reduction of existing shares held by major shareholders, including the parent company TY Holdings. The main creditors resolved the corporate improvement plan at the third creditors' meeting at the end of April, which included ▲a 100-to-1 capital reduction of shares held by major shareholders such as TY Holdings ▲full conversion of pre-workout loans from the parent company TY Holdings into equity ▲full conversion of post-workout loans from TY Holdings into perpetual bonds ▲50% equity conversion of unsecured financial bondholders, and signed an implementation agreement on the 30th of last month.
At the extraordinary general meeting, along with the capital reduction of shares held by major shareholders, the agenda to differentially reduce shares held by minority shareholders by 2-to-1 and the agenda to partially amend the executive retirement pay regulations to cut executive retirement pay were all passed. A Korea Development Bank official explained, "With the passing of the first procedures in the corporate improvement plan, such as capital reduction of existing shares and cuts in executive retirement pay, at the extraordinary general meeting, the implementation of the self-rescue plan has officially begun." The record date for the capital reduction is set for the 26th, reducing Taeyoung Construction's number of shares from 40,201,240 to 12,120,435, and its capital from 20.1 billion KRW to 6.06 billion KRW.
After the extraordinary general meeting, Taeyoung Construction held a board meeting and resolved a third-party allotment paid-in capital increase to convert 632.93 billion KRW borrowed from the parent company and main creditor banks into equity. A total of 273,995,695 new common shares will be issued at 2,310 KRW per share.
The third-party allotment recipients include the parent company TY Holdings with 173,161,730 shares, Korea Development Bank with 34,199,134 shares, Hana Bank with 10,822,510 shares, and the National Pension Service with 10,794,767 shares, increasing TY Holdings' stake to 60.56% after the conversion. Taeyoung Construction stated that the purpose of the third-party allotment is "to achieve the company's management objectives, including improving the financial structure through equity conversion."
Additionally, Taeyoung Construction held the previously announced bondholders' meeting for individual investors holding corporate bonds. This was a procedure to obtain consent from individual investors to extend corporate bonds maturing in July, and the extension plan was approved with the agreement of more than two-thirds of the attending bondholders. Taeyoung Construction proposed to individual investors a plan to convert 50% of the bonds into equity, extend the maturity by three years, and increase the coupon interest rate from 2.59% per annum by 3%.
At a press conference marking his second anniversary in office, Kang Seok-hoon, chairman of Korea Development Bank, responded to questions regarding Taeyoung Construction's workout by saying, "Taeyoung Construction held a board meeting and finally approved the equity conversion agenda," adding, "The implementation period for the corporate improvement plan is set at three years. Although there will be impacts from various economic conditions, we will strive to ensure a successful workout within three years."
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