Taeyoung under pressure to unveil new self-rescue measures
The headquarters of Taeyoung Engineering & Construction in Seoul is seen in this file photo, Jan. 7. Yonhap
The troubled Taeyoung Engineering & Construction has taken steps to fulfill self-rescue efforts and is expected to announce additional measures to win creditors' approval for the initiation of a debt workout program, officials said Monday.
Last month, Taeyoung applied for a debt restructuring program due to a liquidity shortage over real estate project financing (PF) loans and announced a set of self-rescue measures.
But creditors, led by the state-run Korea Development Bank (KDB), and the government had said that they fell far short of expectations and requested a better proposal.
On Monday, TY Holdings, the parent company of Taeyoung E&C, supported the outstanding 89 billion won ($67.61 million) from the sale of Taeyoung Industries, the group's overseas trading affiliate, into the construction arm, according to financial authorities.
"The 89 billion-won funding was one of the four self-rescue measures that Taeyoung has pledged, and the move is expected to help the company and the creditors take a step closer to settlement," an industry official said.
"The company is likely to announce a fresh set of measures as early as today," he added.
TY Holdings initially committed to using 154.9 billion won from the sale of the affiliate to support Taeyoung E&C, but it only has provided 65.9 billion won and directed the remaining 89 billion won toward servicing the holding company's joint surety debt.
The group had said that the debt repayment was also a form of support for the builder, but creditors dismissed the claim and warned of seeking court receivership if such "fundamental conditions" are not met.
Other self-rescue efforts include selling its entire stakes in Ecobit and BlueOne.
It requires 75 percent approval from creditors to begin the workout process, and the final decision on the initiation is expected to be made at the creditors' meeting slated for Thursday.
On Monday, Finance Minister Choi Sang-mok held a meeting with Bank of Korea Gov. Rhee Chang-yong, KDB chief Kang Seog-hoon and chiefs of financial institutions and discussed the matter.
"The participants shared the need for Taeyoung to come up with sufficient and detailed additional self-rescue measures to gain creditors' trust, while swiftly implementing the pledges that it has presented," the finance ministry said in a release.
KDB said there has been some progress regarding talks on the debt restructuring plan, and the creditors will continue close consultations with the company.
The government also called on the creditors to proceed with a workout process "normally" if they confirm Taeyoung's willingness to implement self-help pledges.
Taeyoung E&C, the 16th-largest builder in Korea in terms of construction capacity, has been suffering from a liquidity shortage amid high interest rates and a slumping property market, and its outstanding PF loans came to 3.2 trillion won.
Real estate PF loans have emerged as a major risk factor for the country's financial sector and the overall economy, and the government vowed to expand liquidity supply programs from the current level of 85 trillion won, if needed. (Yonhap)