Taeyoung E&C kicks off original debt restructuring plan with $68 million infusion

Taeyoung E&C has received an injection from parent company TY Holdings in a bid to secure creditor approval for the firm's debt workout program. Creditors will reach a final decision on the proposal Thursday.

Taeyoung Engineering & Construction's headquarters in Yeongdeungpo District, western Seoul [YONHAP]

Korea's embattled Taeyoung Engineering & Construction (E&C) has taken steps to follow through with the original self-rescue efforts it proposed in December, and has committed to announcing additional measures, in a move to win creditors' approval for its debt workout program, the company announced Monday.

TY Holdings, Taeyoung E&C's parent company, injected 89 billion won ($67.71 million) of funds from its sale of overseas trading affiliate Taeyoung Industries into the debt-ridden construction company on Monday morning. TY Holdings also borrowed 43 billion won from Taeyoung's founding family member with shares of broadcaster SBS as collateral.

Creditors will see the overall self-rescue process and will make a final decision regarding the workout initiation at the creditors' meeting scheduled for Thursday.

“We have fulfilled our promise to directly support Taeyoung E&C with the 154.9 billion won proceeds from the sale of Taeyoung Industries following the workout application,” TY Holdings said in a news release on Monday, following pressure from the presidential office and the government over the weekend.

TY Holdings had pledged to use funds from its sale of Taeyoung Industries to rescue its ailing construction arm in the self-rescue proposals it issued in December. It has since faced criticism from financial authorities, who claimed that it had instead used the 89 billion won to settle unrelated debt within TY Holdings in an attempt to evade management responsibility.

“The other three restructuring plans are set to be swiftly implemented following board approval in the coming days,” the company added. In addition to the injection of funds from the Taeyoung Industries sale, proposed measures include the sale of waste-to-energy company Ecorbit; the collateralization of the company's shares golf resort operator BlueOne, as well as a possible sale; and the collateralization of a 62.5 percent stake in grain handling-and-storage company Pyeongtaek Silo.

“We'll discuss with the primary creditor, Korea Development Bank, to promptly formulate specific measures [for the additional restructuring plans demanded by creditors],” it said, adding, “We request assistance in facilitating a smooth workout process for Taeyoung E&C.”

TY Holdings also borrowed 33 billion won from Yoon Jae-yeon, the youngest daughter of the founder and chairman of Taeyoung Group, and offered 1.17 million shares of the private broadcasting company SBS as collateral for “securing financial stability,” according to the Financial Supervisory Service's electronic disclosure. This short-term loan, spanning six months, comes with an interest rate of 4.6 percent.

The company also borrowed 10 billion won from BlueOne, also a short-term loan with an interest rate of 4.6 percent.

The company had not announced additional self-rescue plans as of press time at 5:30 p.m. on Monday.

On Monday, Taeyoung E&C's stocks closed at 3,195 won, an increase of 3.4 percent from the previous day, reflecting optimism for the approval of Taeyoung E&C's workout application. The shares peaked at a 20.71 percent increase during intraday trading.

SBS, under the same holding company as Taeyoung E&C, closed at 31,100 won, a drop of 9.46 percent from the previous trading day.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]