Securities Firms Including Kyobo, Meritz, Hana Participate
Pre-Subscription Rate Exceeds 30%, Securing Funding
HDC Hyundai, Daeheung Construction Aim for May 2028 Completion
The regional industrial complex development project ‘Chungju Dream Park,’ led by Chungju City, secured project financing (PF) funds amid controversy over artificial adjustment of the pre-subscription rate. The financing was successful as the pre-subscription rate condition of 30% set by Kyobo Securities was exceeded.
According to the investment banking (IB) industry on the 18th, Chungju Dream Park Development Co., Ltd. raised PF funds with Kyobo Securities and others as lead managers. The PF loan is a credit line loan secured by the project site land and pre-sale payments, with the scale known to be between 200 billion and 300 billion KRW. Meritz Securities, Hana Securities, and others participated in the PF loan along with the lead managers. The loan maturity is until April 2029.
The Chungju Dream Park industrial complex development project involves creating and selling an industrial complex in Yongjeon-ri and Haguam-ri, Jungangtap-myeon, Chungju-si, Chungcheongbuk-do. Chungju City leads the project by investing 24% equity. Construction companies responsible for the project include HDC Hyundai Development Company (27%), Daeheung Construction (23%), and Taeseong Construction (6%), while Kyobo Securities (17%) manages the PF and holds equity shares.
Chungju Dream Park Development will invest the raised funds into the industrial complex development project. The project site will include industrial facilities, commercial facilities, support facilities, and residential facilities. Construction companies such as HDC Hyundai Development Company, Daeheung Construction, and Taeseong Construction plan to start construction in January next year, aiming for completion in May 2028. The Dream Park industrial complex project was first approved in 2021.
This PF fund procurement was realized as the pre-subscription rate condition of 30% set by Kyobo Securities for PF execution was surpassed. More than ten companies pre-subscribed for industrial land within the complex, most of which are known to be non-local companies. Another PF execution condition, the land acquisition rate, also exceeded 50%.
Some raised suspicions regarding the content of the pre-subscription. There were claims that Chungju City pressured local companies to pre-subscribe to meet the PF preconditions. There are suspicions that the pre-subscription rate was artificially inflated to accelerate the project progress.
However, the IB industry maintains that there were no particular issues with the pre-subscription content based on the PF review results. The project owner, Chungju Dream Park Development, secured the industrial complex site (real estate trust) and the pre-sale payment claims promised by pre-subscribers as collateral for the PF. An industry insider said, "If there had been problems with the subscription content, it would have been difficult to recruit the PF lending group."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
