Taeyoung Group set to unveil new self-rescue plan

The potential collapse of Taeyoung E&C\'s workout is raising concerns about the impact on the construction industry and the financial sector. The entrance to the headquarters of Taeyoung Engineering & Construction is seen on a holiday on July 7 in Yeongdeungpo-gu, Seoul. Reporter Kwon Do-hyun lightroad@kyunghyang.com

The possibility of court management of Taeyoung E&C, which was initially expected to be a debt workout, was raised as a self-rescue plan proposed by Taeyoung Group did not meet the creditors' expectations. The urgent priorities for a debt workout include resolving the issue of the 89 billion won sale price of Taeyoung Industries and the owner family's sincere contribution to the company.

A staffer at TY Holdings, the holding company of Taeyoung Group, said in a phone interview on January 7 that the company is "in internal discussions on its self-rescue plan." Earlier, financial authorities demanded that Taeyoung Group come up with a self-rescue plan that would satisfy its creditors by last weekend. TY Holdings is reportedly continuing behind-the-scenes negotiations with the authorities and its creditors while making last-minute decisions internally.

The key issue is TY Holdings' 89 billion won sale price for Taeyoung Industries. The creditors are demanding Taeyoung Group inject the outstanding portion of 89 billion won out of 154.9 billion won, which is the sale price of Taeyoung Industries, to support Taeyoung E&C.

Supporting Taeyoung E&C with the sale price of Taeyoung Industries was the first of four self-rescue plans that Taeyoung Group promised to the Korea Development Bank when it applied for a debt workout for Taeyoung E&C.

However, it turned out that Taeyoung Group did not directly support Taeyoung E&C, but used 89 billion won out of 154.9 billion won on repaying the joint debt of TY Holdings and Taeyoung Construction. The creditors say that the repayment of joint debt cannot be viewed as support for Taeyoung E&C.

The creditors are also demanding that the remaining three of the four plans promised by Taeyoung Group - promoting and paying for the sale of its affiliate EcoBit, providing security for BlueOne and promoting its sale, and providing security for Pyeongtaek Cyro -- be confirmed and implemented through the board's resolution.

People are also focusing on whether Taeyoung Group will come up with additional self-rescue plans utilizing its holding company, TY Holdings. Financial authorities have also stated that Taeyoung Group should come up with a self-rescue plan using its stake in TY Holdings, if not its key affiliate SBS.

It will also be interesting to see if the owner family will make additional private contributions, which is because the previous contribution of 48.4 billion won by the owner family is doubtful for the creditors. On January 4, TY Holdings announced that Taeyoung Group Chairman Yoon Seok-min provided 41.6 billion, which is his share of the sale price of Taeyoung Industries, to Taeyoung E&C.

However, subsequent disclosures revealed that Yoon used 41.6 billion won to buy new capital securities of TY Holdings, instead of directly supporting Taeyoung E&C. The creditors say that it cannot be recognized as a share of the owner family's responsibilities because it is not direct support for Taeyoung E&C. For this reason, the creditors estimate the amount of private contributions by Yoon and his family at 6.8 billion won, not 48.4 billion won.

There are also suspicions within the creditors that Taeyoung Group has started to "cut its tail" as it is expected to be difficult to normalize the company in the face of the worsening real estate economy even if Taeyoung E&C will be able to initiate a debt workout.

It could be interpreted that Taeyoung group is focusing on repaying the joint debt of TY Holdings and protecting the holding company and its main affiliate SBS, rather than a debt workout.

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