DS Networks, one of the nation's three largest project developers, notified employees that it will proceed with a rehabilitation process. It said it would apply the "hybrid rehabilitation procedure" announced by the Seoul Bankruptcy Court in Apr. and improve its financial structure.
According to DS Networks on the 26th, the management delivered this via an in-house notice that afternoon. The management said, "Amid rapidly changing market conditions recently, we have faced a short-term liquidity deterioration," adding, "To fundamentally resolve the issue and secure long-term stability, we have inevitably decided to proceed with rehabilitation."
According to ChosunBiz reporting, DS Networks recently hired a tax firm and discussed this financial restructuring effort. It had been reviewing several options, including workout and court receivership. However, DS Networks had officially denied this matter as "groundless."
In the notice, the management said, "DS Networks holds numerous high-quality assets, which will serve as a solid foundation to restore the company's financial soundness and rebuild growth momentum."
The management also said it plans to proceed with a "hybrid rehabilitation procedure" with the court. This is a restructuring innovation plan announced by the Seoul Bankruptcy Court in Apr., allowing nonpublic negotiation and adjustment with creditors before the rehabilitation process.
It is a new method that allows corporations to receive court receivership even while undergoing a workout. The court issues a comprehensive stay order preventing creditors from enforcing assets against corporations that have entered a workout and supports them in maintaining normal operations through comprehensive business authorization.
DS Networks' management said, "As this process proceeds, there will be a process to accurately identify and assess the company's current situation through financial institutions and the court," adding, "This is an essential step to ensure the company's value is properly recognized and to achieve a successful rehabilitation."
It continued, "To proceed with this process swiftly, companywide cooperation is more important than anything," adding, "We ask for active cooperation so that all relevant materials held by each business unit can be collectively compiled and managed by the legal, finance, and planning teams."
In the industry, this decision by "DS Networks," the No. 1 company, is expected to be a significant shock. DS Networks ranked No. 1 in sales in the project development sector for three consecutive years from 2020 to 2022. Along with MDM and Shinyoung, it is one of Korea's three major project developers. It made aggressive investments during the real estate boom, but appears to have been unable to avoid a cash crunch amid the slump in the construction industry.
DS Networks' sales last year were 745 billion won, down 9.0% from the previous year, and it posted an operating loss of 160.3 billion won, swinging to a deficit. Operating profit in 2023 was 45.6 billion won.