Troubled builder Taeyoung Engineering & Construction Co. has received 96.1 percent of support from creditors to move forward with a debt restructuring program, its main creditor said Friday.
The level of support was higher than the 75 percent that Taeyoung was required to have for the debt rescheduling program, allowing the builder to postpone the repayment of its debts until April 11.
Under the program, due diligence will be conducted to figure out the financial status of Taeyoung and its viability, according to the Korea Development Bank, its main creditor.
Although Taeyoung has gained needed relief, the builder still must secure its own operating funds, including labor and construction costs, which are estimated to exceed over 500 billion won ($379.8 million), before a final restructuring plan can be confirmed.
A group of creditors called for Taeyoung to make "bone-crushing" efforts to smoothly carry out the debt restructuring program.
A Taeyoung official said the company will sincerely carry out self-rescue measures to tide over its liquidity crisis.
"Taeyoung will make concerted efforts to conduct self-help measures to wrap up the workout program early and successfully, and thus minimize potential damages to all related parties, including subcontractors," the official said.
Taeyoung announced a regulatory filing on the start of the debt workout program, under which creditors will commission an independent agency to carry out due diligence on the financial health of the 16th-largest builder in South Korea.
The creditor decision sent shares in Taeyoung plummeting in early morning trade. Taeyoung shares had been changing hands at 3,390 won as of 10:23 a.m., down nearly 10 percent from the prior session.
Taeyoung has been suffering from a liquidity shortage amid high interest rates and a slumping property market, and its outstanding project financing loans stand at 3.2 trillion won.
Real estate PF loans have emerged as a major risk factor for the country's financial sector and the overall economy. The government has vowed to expand liquidity supply programs from the current level of 85 trillion won, if needed. (Yonhap)
