Aegis: "Sale of Centerfield an Unavoidable Decision to Protect Investors"

Sale Unavoidable Due to Lack of Agreement on Loan Extension
"If EOD Leads to Foreclosure or Auction, It Violates Duty of Care"

Aegis Asset Management stated that its decision to pursue the sale of Centerfield, located on Teheran-ro in Gangnam-gu, Seoul, was an unavoidable measure to protect fund investors from the risk of losing the benefit of term (EOD) and the property entering foreclosure or auction due to the expiration of the loan.

Previously, as Aegis Asset Management, which manages the fund holding Centerfield, initiated the sale process, Shinsegae Property, which holds a 50% stake, strongly opposed the move and declared its willingness to take legal action. The National Pension Service, a major investor, also opposed the sale and is pushing to replace the general partner (GP) managing the fund.

On January 22, Aegis Asset Management released a statement saying, "The loan for Centerfield matures in September this year, and the fund matures in October this year. As the beneficiaries have not reached an agreement on extending the fund maturity, we have initiated the sale process to ensure the normal redemption of the fund and the distribution of returns to investors."

The company explained that if the asset is not sold and the 1.2 trillion won loan maturing in September is not repaid, the fund will face an EOD event, which would lead to foreclosure or auction of the asset (Centerfield), directly resulting in asset value impairment and investment losses.

Aegis stated, "We aimed to maximize returns for investors through a successful sale before maturity and fulfill our responsibilities as an asset manager," explaining the background of the sale process.

Originally, Aegis proposed a mid- to long-term business plan to investors starting in 2024, ahead of the fund's original maturity date in October last year, and prepared for an extension. Aegis explained, "Shinsegae Property was in favor of extending the fund maturity to retain the asset, but the National Pension Service, another investor, was negative about extending the fund maturity. As the beneficiaries could not narrow their differences, we implemented a one-year short-term extension last October. Since then, we have closely discussed various options such as further extension or sale with the beneficiaries, but could not reach an agreement on extension by early this year."

As the investors failed to reach an agreement, the fund maturity could not be extended, and the liquidation process through a sale was ultimately initiated.

The National Pension Service, which opposes the sale, has already begun the process to replace the GP for Centerfield. It plans to terminate its contract with Aegis, transfer the asset, and select a new asset manager next month.

Within the investment banking (IB) industry, there are concerns that the investors' insistence on both "no fund maturity extension" and "opposing the sale," while also replacing the asset manager, is somewhat excessive. An IB industry official commented, "For complex development projects like Centerfield that have been successfully completed by a GP, it is typical either to extend the fund maturity or to sell the asset together at a high price to maximize returns. Given that Aegis has not particularly mismanaged the fund, it is unusual for the situation to escalate to such an extreme confrontation."