Taeyoung Group to sell stake in waste company Ecorbit in bid to rescue construction affiliate

Taeyoung Group is selling its entire stake in waste-to-energy company Ecorbit to aid its financially troubled construction affiliate.

Taeyoung Engineering & Construction's Yeouido office building in western Seoul. [YONHAP]

Taeyoung Group is selling its entire stake in waste-to-energy company Ecorbit to aid its financially troubled construction affiliate.

TY Holdings, Taeyoung’s holding company, said on Monday evening through an electronic disclosure that it signed a sales and purchase agreement to divest its 50 percent stake in Ecorbit to the IMM consortium, which consists of IMM Private Equity and its affiliate IMM Investment.

TY Holdings and the U.S. private equity fund Kohlberg Kravis Roberts (KKR) each held a 50 percent stake in Ecorbit. The two companies decided to sell off their stakes in Ecorbit and discussions were underway with potential bidders.

Ecorbit is valued at 2.07 trillion won ($1.5 billion).

Ecorbit is one of nation’s largest waste management companies, recording an operating profit of 110 billion won and revenue of 674.4 billion won in 2023.

The move will speed up the debt restructuring of its construction company Taeyoung Engineering & Construction (E&C).

Taeyoung E&C, the country’s 16th largest builder, was forced to apply for a debt restructuring program in late December after it faced a liquidity shortage due to real estate PF loans amounting to 2.5 trillion won.

The builder gained approval from its creditors to initiate the move in January after it proposed a self-rescue plan that included the sale of certain affiliated companies, such as Ecorbit and golf resort operator BlueOne.

TY Holdings is expected to use part of the 1.035 trillion won from the sale of Ecorbit to repay its loan from KRR. The holding company said in January that it borrowed 400 billion won from KRR at an annual interest rate of 13 percent, lending it to Taeyoung E&C. After repaying the principal and interest, TY Holdings is expected to inject the remaining amount to its builder to improve its financial structure.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]