Value context and insight. lkm@koreatimes.co.kr
Will Taeyoung lose status as the largest shareholder of SBS?
The headquarters of Taeyoung Engineering & Construction in Seoul / Yonhap
By Lee Kyung-min
Weeks of irresponsibility concerning Taeyoung Engineering & Construction, the troubled affiliate of Taeyoung Group, is bringing into question the group’s ownership of SBS, a local broadcaster and the group’s most lucrative affiliate, according to market watchers Sunday.
They say the Taeyoung family's mismanagement of risk associated with the potential bankruptcy of the construction affiliate and resultant consequences is sufficient for their disqualification as the largest shareholder of the major Korean broadcaster.
Further advancing this view is the group's refusal to contribute family assets to navigate the acute liquidity crisis, all the while fortifying the holding firm’s control of the broadcaster with the much-dreaded court receivership in mind.
The government maintains no support measures will be in store unless Taeyoung outlines a self-rescue plan at significant expense.
Dodging?
TY Holdings, the group’s holding firm, said in a public disclosure statement on Jan. 5 that it has issued 41.6 billion won ($31.6 million) in hybrid bonds.
It was part of the 154.9 billion won cashed after the sell-off of Taeyoung Industries, the group’s overseas trading affiliate. The group already oriented 89 billion won to pay off the debt of TY Holdings.
The move fueled criticism that the group deliberately failed – yet again – to promptly provide liquidity to the construction affiliate. It had long pledged to use the 154.9 billion won in full to salvage the construction affiliate first.
Creditors led by the state-run lender, Korea Development Bank, maintain the hybrid bonds are not recognized as valid efforts, since the money is not provided directly to the construction affiliate.
“The news of the issuance of the bonds is yet further evidence of Taeyoung group not complying with the demands of the creditors,” an industry official said.
“Taeyoung has made repeated pledges to do its utmost to salvage the construction affiliate, but the recent developments indicate the firm is doing anything but.”
Prime Minister Han Duck-soo said the consequences of corporate mismanagement should be resolved by the decision-maker.
“Taeyoung must go to great lengths to make efforts painful and extensive enough to win not only the creditors over but the public at large,” he said during an interview with KBS, a local broadcaster early Sunday.
A debt workout will only come in the form of postponing debt obligations, including payment of principal and interest, he added.
“In other words, the firm management will take responsibility for the lapse in business judgment.”
The KDB-led creditors will meet Jan. 11 to determine whether a workout should materialize.