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JoongAng Ilbo Refuses to Repay 137 Billion Won in Bonds Amid Restructuring Crisis
🇰🇷 South Korea /Economy & Trade

JoongAng Ilbo Refuses to Repay 137 Billion Won in Bonds Amid Restructuring Crisis

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Ongoing story
  • JoongAng Ilbo has refused to repay 137 billion won in corporate bonds that became due after its credit rating was downgraded.
  • The company stated the repayment refusal is unrelated to its actual payment ability and is to maintain fairness among creditors during its corporate restructuring process.
  • The company's long-term credit rating was further lowered to 'CCC', indicating a high probability of default, as it navigates corporate restructuring and debt repayment negotiations.

JoongAng Ilbo faces immediate financial pressure after refusing to repay 137 billion won in corporate bonds. The company's credit rating was significantly downgraded, triggering a clause that allows creditors to demand immediate repayment, a situation known as "loss of benefit of time."

In response, JoongAng Ilbo stated that the demand for repayment is "unrelated to the company's actual payment ability." The company is currently undergoing corporate restructuring, or "workout," and claims it cannot comply with the immediate repayment demand to ensure fairness among all creditors. This move highlights the precarious financial situation the media company is in.

The loss of benefit of time is a contractual clause that allows creditors to demand repayment before maturity if the debtor's credit rating falls.

— JoongAng IlboExplaining the financial mechanism that triggered the repayment demand.

Korea Ratings further downgraded JoongAng Ilbo's long-term credit rating from 'B-' to 'CCC', placing it under 'negative outlook.' This is the second downgrade in just two days, following an earlier drop from 'BB+' to 'B-' after the workout plan was announced. A 'CCC' rating signifies a high likelihood of default, underscoring the severity of the financial challenges.

The company is now in negotiations with creditors to defer payments and extend maturities on various debts, not just the bonds that have triggered the current crisis. Meanwhile, related entities, including JTBC, are also proceeding with court-supervised restructuring processes, with representative hearings scheduled in the coming days.

The early repayment burden on the rated bonds has materialized, and uncertainty regarding liquidity response capabilities has expanded.

— Yang Hee-cheolSenior researcher at Korea Ratings, explaining the rationale behind the credit rating downgrade.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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