Shares of Taeyoung Engineering & Construction Co., a troubled mid-sized builder, were suspended Wednesday due to its negative net asset balance amid an ongoing debt restructuring, company officials said.
Its main creditor, the state-run Korea Development Bank, said it is extending the deliberation period for the restructuring plan by up to one month to allow more time before finalizing plans to normalize the company.
Taeyoung, the 16th-largest builder in South Korea in terms of construction capacity, applied for a debt restructuring program in December last year due to a liquidity shortage over real estate project financing loans.
Taeyoung said in a regulatory filing Wednesday that its total assets stood at minus 562.6 billion won ($427.5 million), indicating a negative net worth in which its outstanding liabilities exceed its assets.
In accordance with regulations, the negative net asset balance halted the trading of its stocks on the main Korea Composite Stock Price Index.
The builder said it has reflected the expected losses from the PF loans and that it is an inevitable result amid the debt restructuring.
The contingent liabilities from the PF businesses could be reduced as it goes through the process of normalization, the company said.
Creditors also said the negative net asset balance can occur and it will not affect the restructuring process.
Creditors agreed to allow Taeyoung to postpone the repayment of its debts until April 11, but the builder still must secure its own operating funds, including labor and construction costs, which are estimated to exceed 500 billion won, before a final restructuring plan can be confirmed.
Taeyoung has been suffering from a liquidity shortage amid high interest rates and a slumping property market, and its outstanding PF 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)
