Builder Taeyoung E&C files for debt workout

A company flag is waved at the office of Taeyoung Construction, which applied for workout due to the \'PF crisis\', on the 28th. By Han Soo-bin Reporter

Taeyoung E&C filed for a debt workout (joint management procedure with creditors) on December 28, amid speculation of a crisis in real estate project financing (PF). The government emphasized that Taeyoung E&C must convince its creditors by preparing a thorough self-rescue plan and said it would prevent damage to its contractors and suppliers.

As management difficulties of the large construction company, which ranked 16th in construction capacity, are materialized, there are growing concerns that the PF crisis may spread across the board.

Taeyoung E&C filed for a debt workout with its main lender, the Industrial Bank of Korea, on the 28th. The decision was made by the company's board of directors in the morning as it found it difficult to extend the maturity of PF loans of 48 billion won for its Office 2 project in Seongsu-dong, Seongdong-gu, Seoul.

A workout is a system that extends the maturity of loans and provides additional funds to a company with temporary liquidity problems if more than 75 percent of creditors, including financial institutions, agree.

The Industrial Bank of Korea said, "Taeyoung E&C has a higher proportion of PF-guaranteed debt than other construction companies due to its aggressive PF business expansion, but as the real estate downturn continues, it has become difficult for the company to extend the maturity of its loans and refinance.”

Taeyoung E&C's real estate PF loan balance stood at 3.2 trillion won as of the third quarter of this year, excluding SOC business. The PF guarantee ratio to equity was 373.6 percent, which is at least three times higher than other construction companies.

Following its 1 trillion won self-support efforts since the beginning of this year, Taeyoung Group filed for the workout of Taeyoung E&C, submitting additional self-support plans such as selling affiliates and providing asset and equity collateral.

The decision on whether to initiate a workout for Taeyoung E&C will be made at the first financial creditor council on January 11 next year. The Industrial Bank of Korea sent a notice to convene the creditor council to dozens of financial companies, including PF loan guarantee obligors.

At the meeting, chaired by Financial Services Commissioner Kim Joo-hyun, the Ministry of Economy and Finance, the Ministry of Land, Infrastructure, and Transport, the Financial Services Commission, the Financial Supervisory Service, and the Industrial Bank of Korea discussed the protection of contractors and suppliers in connection with Taeyoung E&C's workout application, as well as measures to stabilize the real estate PF and financial markets. "We will immediately implement measures to protect contractors and suppliers, and immediately implement market stabilization measures already in place in preparation for possible market volatility," Kim said.

※This article has undergone review by a professional translator after being translated by an AI translation tool.