Taeyoung E&C, which is undergoing a workout (corporate restructuring procedure), has effectively shifted to a solo developer system by acquiring nearly an additional 30% equity in the project company for the Bucheon Ojeong military base redevelopment. Three years ago, when it entered the workout, this business site even considered selling the project company equity and construction rights to secure cash. But as the company has accelerated normalization recently, Taeyoung E&C appears to have decided to speed up development by securing additional equity instead of selling the project.
According to Taeyoung E&C and its creditor group on the 30th, Taeyoung E&C has increased its equity in Neocity, the developer for the Bucheon Ojeong military base redevelopment, to 97%. Taeyoung E&C previously held 69% of Neocity's equity. Taeyoung E&C acquired the entire 28% equity held by existing investors Samwoo IMC (14%), Misan Construction (8%), and ESI (6%), raising its stake. As a result, with 97% equity in Neocity, implementation of the project has effectively shifted from a joint structure to Taeyoung E&C's sole control.
The Bucheon Ojeong military base project will build about 4,000 apartment units on a 445,311-square-meter military site around 148 Ojeong-dong, Bucheon. Taeyoung E&C established Neocity, the project company, in 2017 to develop the site.
A Taeyoung E&C official said, "We acquired the equity of local firms that had participated in the development," adding, "The transaction contract is not yet fully closed."
Taeyoung E&C had planned to handle both development and construction for this project. But at the end of 2023, when the company declared a workout, it launched an aggressive cleanup of troubled project financing (PF) business sites, and this establishment also became a candidate for sale. At the time, Taeyoung E&C disclosed, "We are reviewing an equity sale related to the Bucheon military base modernization and urban development project, but nothing has been finalized."
After twists and turns, the project got on track thanks to Bucheon City's strong will to restart it. Taeyoung E&C completed the purchase of the military site last year and worked to resume the project, including seeking an alternate builder. Taeyoung E&C held talks with Hoban Construction for alternate construction, but they fell through at the last minute. In the end, Hyosung Heavy Industries agreed to take on construction of the military base redevelopment. After Hyosung Heavy Industries was selected last month as the alternate builder, the project transitioned to a main PF of 800 billion won.
With normalization of the military base redevelopment, Taeyoung E&C appears to have a green light for cash recovery and management normalization. In particular, by increasing its equity in the project company, Taeyoung E&C has gained momentum to drive the project. A Taeyoung E&C official explained, "A higher project company equity ratio can speed up project execution," adding, "The city also wants the development."
However, with responsibility for this development concentrated at Taeyoung E&C, risks such as potential unsold units amid real estate market shifts could weigh on the company. The Bucheon Ojeong military base redevelopment is reportedly planning to start site development construction in the second half of this year.