Korea Development Bank “Recovery delayed due to unsold units”
Business Liquidation Policy of the Corporate Improvement Plan
Application for ‘resale’ of some bank ships in the future
380 billion GTX-C shares to be sold
Woori Bank: “TY Holdings cannot suspend its debt”
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While Taeyoung Construction’s corporate improvement plan, which is being exercised (corporate improvement work), is set to be approved by creditors at the end of this month, lenders have a difference of opinion over the won 700 billion won ‘Gumi Flower Garden’ project . . The Korea Development Bank, the main creditor bank, plans to liquidate the business, but some creditors are asking to restart the business through a ‘later resale’, saying the burden of losses will increase if the entire bond is called. remove
According to the real estate industry on the 26th, the Gumi Flower Garden (Gumi Grand Foret Desian) development project is classified as ‘liquidation’ in Taeyoung Construction’s business site reorganization plan proposed by the Korea Development Bank and is expected to go through the pre-sales process. However, there is widespread disagreement as some lenders who provided real estate financing (PF) project money to the business site are demanding that Taeyoung Construction go ahead with the project.
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The Gumi Flower Garden development project, divided into complexes 1, 2, and 3, is a large-scale business with a contract amount of 711.5 billion won at the time of the 2022 contract. The developer is GM Park, where Taeyoung Construction has invested 49.9% of the shares, and in fact, Taeyoung Construction is responsible for operation and construction. It was a project to develop park and apartment complexes on an area of 690,000 m2 in Doryang-dong, Gumi-si, and the intention was to have 21 buildings and 2,643 homes in three complexes with 3 floors underground and 40 floors above. the earth .
However, shortly after the sale of the first complex in November last year, a Taeyoung Construction exercise occurred, and the sales rate ended at around 17%. The Korea Development Bank reflected on the response from Taeyoung Construction’s creditors and instituted a plan to liquidate the business. This is because the sales rate is low and the backlog of unsold units remains in Daegu, so it is believed that there will be a delay in recovering funds.
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Desian Gumi Grand Foret bird view. Data = Taeyoung’s Build
On the other hand, some banks that gave PF loans to the business insist that the business continues. This is because the entire amount of the receivable can be written off, increasing the burden of handling actual losses. Currently, Daegu Bank and Gwangju Bank have loaned 90 billion won and 100 billion won, respectively, to the Gumi Flower Garden Development Project (Complex 1). Samil PwC, which conducted due diligence on Taeyoung Construction, estimates that the recovery rate of unsecured claims from creditors is 7% in the case of liquidation and 40.7% in the case of a going concern.
However, even if the project is resumed, given the severe backlog of unsold units in the Daegu area, it is likely to be resold at a later date rather than continuing construction immediately . Taeyoung Construction is discussing a plan to return the deposit paid to existing contractors through the Housing and Urban Guarantee Corporation (HUG), buy back the land from HUG, and then resume business when the sales market in the Daegu area recovers . Except for Gumi Flower Garden Complex 1, Taeyoung Construction plans to complete construction or replace the construction company for the remaining PF phase businesses and continue the project safely. Through this business reorganization, asset damage of 355.7 billion won is expected immediately, but liquidity of 878.1 billion won is expected to be secured in the future.
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In addition, it was decided to liquidate approximately half (9) of Taeyoung Engineering & Construction’s bridge loan business sites (20) which have not yet opened. This includes Gumi Flower Garden Complexes 2 and 3, which remain in land purchase status. Ten sites, including the Bucheon military base site, will sell the consortium shares held by Taeyoung Construction and replace construction companies.
Meanwhile, Woori Bank raised an issue with TI Holdings’ debt repayment deferment clause being included in its corporate improvement plan. A Woori Bank official explained, “Since Taeyoung Construction and not TI Holdings is the target of the exercise, it should be seen separately,” and “We asked that the 3-year moratorium clause of TI Holdings’ joint debt be excluded from the agenda. ” Woori Bank explained.
In the meantime, most of the social overhead capital (SOC) projects will continue as is, but the construction rights for Section 3 of the GTX-C route and the consortium’s shares will be sold. This is due to the view that profitability is low as construction costs have increased significantly. The need to invest as much business capital as the shares he owned was also a burden. The stake size being sold by Taeyoung Construction is about 380 billion won, which is 10% of the total construction cost (3.8 trillion won).
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