As JoongAng Group grappled with liquidity crunch, Hanyang Securities demanded immediate repayment of 22 billion won in commercial paper
Hong Jung-do, vice chairperson of JoongAng Group, bows during a press conference at the JoongAng Ilbo Building in Seoul on Monday, apologizing for the liquidity crisis and rehabilitation proceedings involving several group affiliates, including JTBC. (Yonhap)
South Korean newspaper publisher JoongAng Ilbo was classified as being in first default after failing to meet an early repayment demand on 22 billion won ($14.4 million) worth of commercial paper, according to a regulatory filing Friday.
According to the Financial Supervisory Service's electronic disclosure system on Friday, JoongAng Ilbo said in a filing that it failed to make payment on Thursday due to insufficient deposits in its account.
"A creditor presented the note for payment on June 18, but the company was unable to settle the payment due to insufficient funds in its deposit account," the company said. "As a result, the note was classified as a first default as of June 18."
The defaulted notes were commercial paper held by Hanyang Securities. Their original maturities were Dec. 7 for 12 billion won and March 30, 2027, for 10 billion won.
However, amid the liquidity crisis facing JoongAng Group, an event of default was triggered, prompting Hanyang Securities to seek early repayment.
An event of default is a contractual provision that allows creditors to demand repayment before maturity when certain conditions, such as a credit rating downgrade, are met.
In a statement released Thursday, JoongAng Ilbo said it could not comply with Hanyang Securities' early repayment request.
"JoongAng Ilbo is currently pursuing a workout program with its main creditor bank and must ensure fair treatment of all creditors," the company said.
"Therefore, it is difficult to provide early repayment to a specific creditor before the scheduled maturity date."
ch0221@heraldcorp.com
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