JoongAng Ilbo proposes sale of controlling stake in rehabilitation plan

JoongAng Ilbo, currently undergoing workout proceedings, has included the sale of its controlling stake held by the major shareholder in its self-rescue plan submitted to creditors. A JoongIl Group official confirmed on June 30 that the plan encompasses cost reductions, revenue enhancement measures, and real estate sales, alongside the potential sale of management control shares. The final decision rests with the lead creditors, making the situation fluid.

The current largest shareholder is the group's holding company, JungAng Holdings, with a 64.73% stake. Chairman Hong Seok-hyun holds 15.63%, and CJ OliveNetworks possesses 9.24%. Hana Bank, the lead creditor, has circulated the self-rescue plan and related documents to other creditors. A creditors' meeting is scheduled for July 10 to review the plan, with the possibility of the owner's private capital contribution also being discussed.

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Among the various affiliates of the JoongAng Group, JoongAng Ilbo seems to be the only asset that can be sold, so it appears management control shares were included in the self-rescue plan.

One creditor noted that JoongAng Ilbo appears to be the only viable asset for sale within the JoongAng Group, explaining the inclusion of management control shares in the self-rescue plan. Another creditor pointed to the group's complex financial entanglements, particularly the financial strain on affiliates like JTBC, as a significant factor complicating the workout process. The group's affiliates have faced liquidity issues since mid-June, starting with JTBC's debt default, and JoongAng Ilbo itself defaulted on 22 billion won in corporate bonds on June 19.

The situation highlights a severe liquidity crisis within the JoongAng Group, triggered by the financial difficulties of its broadcasting affiliate, JTBC. The interconnected nature of the group's finances means that the rehabilitation proceedings for various affiliates and the workout for JoongAng Ilbo are intricately linked, posing a significant challenge for swift decision-making by the creditors.

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The current situation is largely due to the financial deterioration of affiliates like JTBC, and it is difficult to make a quick decision on the workout as other affiliates are in corporate rehabilitation and are complexly intertwined.