Seoul Creditors Initiate Due Diligence for Taeyoung Engineering’s Debt Restructuring

SEOUL — The creditors of Taeyoung Engineering and Construction Co. have commenced due diligence on the company, marking a pivotal step in advancing the debt restructuring program for the construction firm. This decision was confirmed by an industry source on Sunday.

According to Yonhap News Agency, who spoke on condition of anonymity, an accounting firm will be appointed this week to evaluate Taeyoung's financial status. This initiative follows the creditor's vote in favor of moving forward with a debt restructuring plan for the company.

Taeyoung, ranked as the 16th largest builder in South Korea by construction capacity, applied for a debt restructuring program in the previous month, citing a liquidity crisis stemming from real estate project financing (PF) loans. The company's liquidity issues have been exacerbated by high interest rates and a challenging property market.

In a temporary relief measure, creditors have agreed to allow Taeyoung to delay its debt repayments until April 11. However, before a final restructuring plan is approved, Taeyoung must ensure it has sufficient operating funds, including labor and construction costs. These costs are estimated to surpass 500 billion won (US$379.8 million).

A group of creditors has urged Taeyoung to make extensive efforts to ensure the smooth progression of the debt restructuring process. With outstanding PF loans totaling 3.2 trillion won, Taeyoung's financial struggles have highlighted the broader risks real estate PF loans pose to South Korea's financial sector and economy. In response, the government has pledged to increase liquidity support programs beyond the current level of 85 trillion won if necessary.

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