Taeyoung offers TY Holdings, SBS shares as collateral amid workout pressure

Taeyoung Engineering & Construction (E&C), an indebted builder that filed for debt restructuring, pledged to use its stock holdings as collateral for loans if further financial infusion is required in the future.

Taeyoung Group's founding chairman Yoon Se-young speaks in a press conference on Tuesday. [WOO SANG-JO]

TY Holdings, the parent company of the troubled Taeyoung Engineering & Construction (E&C), revealed further self-rescue measures on Tuesday to save the indebted mid-sized builder, with shares in itself and SBS being offered as collateral.

The move is designed to appease the demands of financial authorities and creditors for more detailed plans to initiate the workout application.

Taeyoung Group founder Yoon Se-young said Tuesday that the group will put up shares of TY Holdings and SBS, a major broadcasting company in Korea, as a collateral if additional funds need to be infused into saving Taeyoung E&C.

"In addition to the measures already included in the existing self-rescue plan, we also have plans to secure additional funds through the sale or providing collateral of other affiliated companies," the 90-year-old founder said during a press conference at the builder's headquarters in Yeouido, western Seoul, on Tuesday.

Taeyoung's proposed funding measures include the injection of proceeds from the sale of overseas trading affiliate Taeyoung Industries and the sale or the collateralization of the shares in waste-to-energy company Ecorbit, golf resort operator BlueOne and grain handling and storage company Pyeongtaek Silo. Yet the plan was deemed insufficient by creditors for lacking contributions from the owner's family assets or sales of lucrative affiliate shares.

Creditors, including the main creditor Korea Development Bank (KDB), will oversee the overall self-rescue process and will make a final decision on Thursday regarding the debt workout program the builder applied for in December, caused by a liquidity shortage stemming from real estate project financing (PF) loans.

"We believe that the current set of four self-rescue measures could already resolve Taeyoung E&C's liquidity shortage issue by April when the workout plan [for corporate improvement] will be confirmed," said Choe Geum-nak, the vice chairman of TY Holdings. "[The announcement made today indicates] the major shareholder's willingness to pledge both the shares of SBS and TY Holdings should the liquidity shortage persist due to unforeseen circumstances."

However, Choe emphasized the difficulty of selling shares of SBS due to extensive legal regulations of selling broadcasting company stocks.

Following the unveiling of Taeyoung Group's self-rescue plan, KDB released a "positive" assessment of the organized creditor stance on Tuesday.

"Pledging all TY Holdings and SBS shares as collateral is seen as a crucial step for rebuilding trust in the market," KDB said. "If the workout initiation gets the green light in the first creditors' meeting [on Thursday], the creditors' committee will promptly begin due diligence of Taeyoung E&C, evaluating potential and strategies for normalization."

The state-run bank, however, cautioned that if any aspect of the agreed-upon self-rescue plan falls through or significant additional liabilities are uncovered during the investigation, the workout process may be put on hold.

The decision on whether to initiate the workout will be determined through a written resolution in the first creditors' meeting this Thursday, requiring approval from at least 75 percent of creditors.

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