“If necessary, I will put up all of my SBS shares as collateral.” Taeyoung announces additional self-rescue plan two days ahead of workout creditors’ council meeting

Founding Chairman Yoon Se-young personally apologized and announced his intention to provide ‘holding company and SBS shares’ as collateral
Major creditors react positively, expected to start smoothly as long as there are no surprises
Ecobit sale price, Taeyoung calls for 3 trillion won, but takeover candidate devalues ​​it at 1 trillion won

With Taeyoung Construction’s workout (corporate structure improvement work) decision one day away, Taeyoung Group announced an additional self-rescue plan that provides holding company TY Holdings and shares of core affiliate SBS as collateral. Accordingly, financial authorities and major creditors announced that if Taeyoung faithfully implements its self-rescue plan, the start of the workout will proceed smoothly. With the start of Taeyoung Construction’s workout having passed the 9th level, the prevailing view in the financial world is that the conditions will be met, with only the procedure remaining to obtain 11% consent at the creditors’ council on the 75th.

The owner’s family, who had been persistent in holding on, eventually surrendered

On the 9th, Taeyoung Group Founding Chairman Yoon Se-young and Group Chairman Yoon Seok-min held a press conference regarding the workout held at the Yeouido office building, saying that if the four self-rescue plans previously presented were not enough, they would announce a stake in holding company TI Holdings (4%) and a stake in SBS (33.7%). %) was announced as collateral. As of today’s closing price, the shares of TI Holdings and SBS held by major shareholders, including Taeyoung owner, amount to KRW 36.9 billion and KRW 798 billion, respectively.

On this day, the Taeyoung owner family showed a contrasting attitude from the year-end last year, when they consistently insisted on holding out despite the financial authorities and creditors’ strong demands for self-rescue measures. Founding Chairman Yoon began the press conference first with an apology to the public, and Chairman Seok-min Yoon also bowed his head and expressed his apology. Additionally, the two people publicly stated that they would secure liquidity through shares held by the owner family if necessary.

Founding Chairman Yoon said on this day, “I take this opportunity to promise you once again that we will faithfully implement our self-rescue plan, including selling or providing collateral to major affiliates, including our core affiliate, Ecobit.” He added, “TIY Holdings, the majority shareholder, Chairman Yoon, and I, the founder, “We have made a commitment to creditors,” he said. He emphasized, “We will make more efforts to rescue ourselves, and if it is still not enough, we will use the shares of TI Holdings and SBS as collateral to save Taeyoung Construction.”

The first creditors’ council meeting is scheduled to be held in the form of a written resolution on the 1th, and the financial sector believes that there will be no major problems in starting the workout, considering the current atmosphere among creditors. Korea Development Bank, the main creditor bank, said, “Creditors have reached a consensus that a workout can be initiated if the self-rescue plan and major shareholders’ responsibilities are implemented as planned,” adding, “However, if the promise is not kept or large-scale additional insolvency is discovered, the workout will be carried out immediately.” “The out procedure can be stopped,” he said.

Financial authorities also positively evaluated Taeyoung’s additional self-rescue plan. Lee Bok-hyeon, head of the Financial Supervisory Service, said at the Federation of Banks in Jung-gu, Seoul this morning, “If the debtor’s will to save the company is confirmed, it is in line with the original purpose of the workout to broadly consider not only the debtor’s direct debt, but also direct and indirect debt and support for stakeholders.” He also expressed his intention to provide support in accordance with the purpose of the workout, saying, “The supervisory authorities will not hold the responsible person responsible after the fact, such as by issuing a non-action opinion, for the creditors’ decision-making in accordance with the basic purpose of the workout.”

Why Taeyoung has no choice but to come up with an additional self-rescue plan

On this day, Founding Chairman Yoon once again announced that he would faithfully implement the existing self-rescue plan, such as selling or providing collateral for Ecobit, a core affiliate. Ecobit is a company created in 2021 through the merger of Taeyoung Group’s TSK Corporation and private equity fund Kohlberg Kravis Roberts (KKR)’s Eco Solution Group. TY Holdings holds a 50% stake and KKR holds the remainder.

According to TI Holdings Vice Chairman Choi Geum-rak, the sale is expected to proceed quickly as KKR also announced that it will actively cooperate with the sale of Ecobit. However, differences in perspectives on the value of Ecobit are still clear. Currently, Taeyoung Group claims that Ecobit’s corporate value exceeds 3 trillion won, but acquisition candidates in the investment banking (IB) industry estimate it at around 1 trillion won.

If Ecobit is sold for 3 trillion won at Taeyoung’s desired price, Taeyoung will be able to recover about 1 trillion won. Excluding the 5,000 billion won in borrowings secured by Ecobit stocks, the actual funds in Taeyoung’s hands could be around 4,000 trillion won. However, this amount is less than half of Taeyoung Construction’s actual PF loan balance, which is estimated at approximately 1 trillion won. Ultimately, this is why Taeyoung had no choice but to come up with an additional self-rescue plan, including the sale of shares in TI Holdings and SBS.

Among major construction companies, the reason Taeyoung Construction faced such a large-scale PF crisis is because of its high debt ratio and relatively large number of unbuilt business sites. According to Korea Investment & Securities, among Taeyoung Construction’s total PF loans, the proportion of business sites that have not yet begun construction amounts to a whopping 47%. This also applies to the office building project in Seongsu-dong, Seoul, whose maturity amount was 28 billion won on the 480th of last month. As a condition of having the right to construct this project, Taeyoung Construction guaranteed the 480 billion won PF raised by the developer to purchase the land, but even after a year and a half after purchasing the land, it has not yet made a plan to begin construction.

Taeyoung Construction purchased bonds or commercial papers issued by securitization companies a total of 11 times from November to December 12 last year. These securitized securities, with a purchase total of 27 billion won and an average interest rate of over 29% per annum, were issued by a total of 5,991 securitization companies, and all were purchased by Taeyoung Construction. In fact, he took it upon himself because he could not find investors to purchase securitized commercial paper. In addition, Taeyoung Construction has invested hundreds of billions of won in PF projects by making additional investments and lending funds to developers several times.