JoongAng Group will sell core assets including the JTBC and JoongAng Ilbo headquarters and the Ilsan studio to improve its financial structure. After recent failures to sell corporate bonds, downgrades in credit ratings, and setbacks in attracting outside investment heightened liquidity concerns across the group, it began moving to securitize its holdings. In the market, because selling only the headquarters buildings is unlikely to ease the financial burden, there is talk of additional asset sales and the possibility of restructuring affiliates.
On May 8, according to the investment banking (IB) industry, JoongAng Group selected Colliers Korea as the sale advisor for three assets: the JoongAng Ilbo headquarters, the Sangam JTBC Building, and the Ilsan studio. JoongAng Group is said to be pushing to bundle the three assets for a block sale in the mid-500 billion won range.
A sale-and-leaseback structure is the leading option, under which the assets are sold and then leased back. JoongAng Group is said to be reviewing a plan to sign a long-term master lease of around 10 years with the buyer and continue using the existing office space and production infrastructure as is.
The market points to the group's accumulated financial burdens as the reason for pushing this asset securitization. SLL JoongAng and Contentree JoongAng, core content affiliates of JoongAng Group, have recently faced repeated difficulties in attracting investment and raising funds. JoongAng Group is therefore expected to use the proceeds from this headquarters sale to repay borrowings and more.
In fact, credit rating agencies have recently issued a series of warnings about JoongAng Group's overall financial risks. Korea Ratings recently revised the outlooks on the unsecured bond credit ratings of SLL JoongAng and JoongAng Ilbo, lowering them from "BBB/stable" to "BBB/negative." Korea Ratings lowered the commercial paper (CP) and electronic short-term bond credit ratings of Megabox JoongAng and Contentree JoongAng from A3 to A3-.
However, in the industry there are voices saying that selling the headquarters alone has limits in easing the group's overall liquidity pressure. For that reason, both inside and outside the market, observers expect stronger self-rescue measures beyond simple real estate securitization. There is also a growing mood that noncore assets may be streamlined, including selling equity stakes in advertising and platform affiliates and some content subsidiaries.