SEOUL, The government called on troubled Taeyoung Engineering and Construction Co. on Monday to present additional self-rescue measures to gain the trust of creditors and initiate a debt workout process, the finance ministry said.

Last month, the midsized builder applied for a debt restructuring program due to a liquidity shortage over real estate project financing (PF) loans and announced a set of self-rescue measures.

But creditors, led by the state-run Korea Development Bank (KDB), and financial authorities said they fell far short of expectations and requested a better proposal.

The scheme includes drawing 89 billion won (US$67.73 million) from the sell-off of Taeyoung Industries, the group’s overseas trading affiliate, and selling its entire stakes in Ecobit Co. and BlueOne Co.

On Monday, Finance Minister Choi Sang-mok held a meeting with Bank of Korea Gov. Rhee Chang-yong, KDB chief Kang Seog-hoon and chiefs of financial institutions and discussed the matter.

“The participants shared the need for
Taeyoung to come up with sufficient and detailed additional self-rescue measures to gain creditors’ trust, while swiftly implementing the pledges that it has presented,” the finance ministry said in a release.

KDB said there has been some progress regarding talks on the debt restructuring plan, and the creditors will continue close consultations with the company, according to the ministry.

The government called on the creditors to proceed with a workout process “normally” if they confirm Taeyoung’s willingness to implement self-help pledges.

It requires 75 percent approval from creditors to begin the workout process, and the final decision on the initiation is expected to be made at the creditors’ meeting Thursday.

Real estate PF loans have emerged as a major risk factor for the country’s financial sector and the overall economy, and the government vowed to expand liquidity supply programs from the current level of 85 trillion won, if needed.

Source: Yonhap News Agency