JoongAng Ilbo begins workout as creditors back debt restructuring

JoongAng Group Vice Chairman Hong Jeong-do bows in apology during a news conference at the JoongAng Ilbo building in Seoul, June 15, over a liquidity crisis across the group. Yonhap

JoongAng Ilbo, one of Korea's major newspaper publishers, won approval Friday to begin a workout program after facing a liquidity crisis.

A workout is a debt restructuring process conducted through negotiations with creditors, allowing a company to retain greater control over its restructuring than under court-supervised rehabilitation.

The decision came about three weeks after JoongAng Ilbo, the flagship of JoongAng Group, formally applied for a workout with its lead creditor, Hana Bank, on June 19, after a 22 billion won ($15 million) commercial paper issue was officially declared in default amid mounting financial strain across the group.

Hana Bank and other financial creditors approved the launch of the workout at the first creditors' meeting, held through a written vote.

By 6 p.m., creditors representing more than 75 percent of outstanding financial claims had backed the plan, meeting the threshold required to begin the process.

Under Korean law, a workout requires approval from creditors representing at least three-quarters of outstanding financial claims.

Following the approval, creditors are expected to assess the newspaper's assets, liabilities and operations before drawing up detailed debt restructuring measures and a plan to restore the company's operations.

While the newspaper opted for a workout, five other group affiliates, including broadcaster JTBC and holding company JoongAng Holdings, filed for court-led rehabilitation proceedings as liquidity problems across the group worsened.