JTBC Headquarters [Provided by JTBC]

Several affiliates and subsidiaries of JoongAng Group, including the comprehensive programming channel JTBC, have entered court receivership (corporate rehabilitation proceedings) due to a liquidity crisis. JoongAng Ilbo has decided to pursue workout (corporate financial structure improvement).

Amid a series of credit rating downgrades for JoongAng Group affiliates by credit rating agencies, Hong Jeong-do, Vice Chairman of JoongAng Group, apologized to creditors and shareholders, vowing to do his best to recover their losses.

◇ JTBC and 4 Other Companies File for Rehabilitation... Assigned to the 2nd Rehabilitation Division

According to legal circles on the 15th, the Seoul Rehabilitation Court assigned the applications for commencement of rehabilitation proceedings by JoongAng Group's holding company, Central Holdings, along with JTBC, Contentree JoongAng [036420], Megabox JoongAng, and JoongAng P&I, to the 2nd Rehabilitation Division (Presiding Judge Jeong Joon-young).

While separate case numbers were assigned to each company's rehabilitation application, they were all allocated to a single judicial panel for consolidated review.

The court is expected to designate a date for the representative's hearing soon. The Debtor Rehabilitation and Bankruptcy Act stipulates that the court must hear the debtor or its representative when a rehabilitation application is filed.

On the 12th, JTBC declared a default on its syndicated loans totaling 20.6 billion won, failing to repay them upon maturity.

This was due to a significant contraction in the TV broadcasting advertising market as the media landscape rapidly shifted towards digital and over-the-top (OTT) services.

Two days after the default declaration, on the 14th, Central Holdings, Contentree JoongAng, JoongAng P&I, and Megabox JoongAng filed for commencement of rehabilitation proceedings. JTBC also filed an additional rehabilitation application on the same day.

Central Holdings and Contentree JoongAng, among others, also applied for preservative measures and a comprehensive prohibition order.

Preservative measures prevent the company from disposing of assets to preferentially repay specific creditors, while a comprehensive prohibition order, conversely, freezes creditors' claims to prevent them from securing the company's major assets through forced execution, provisional seizure, or auction before the commencement of corporate rehabilitation.

Vice Chairman Hong Jeong-do of JoongAng Group bows in apology at a press conference announcing the commencement of rehabilitation proceedings for some JoongAng Group affiliates, including JTBC, due to a liquidity crisis, held at the JoongAng Ilbo Building in Mapo-gu, Seoul, on the 15th. [Yonhap News] 

◇ Vice Chairman Hong Jeong-do: "An Inevitable Choice"... JoongAng Ilbo Enters Workout

At a press conference held today, Vice Chairman Hong Jeong-do of JoongAng Group stated, "Due to worsening external economic conditions and a credit rating downgrade leading to a cash crunch, we were forced to make an unavoidable choice." He apologized to creditors and shareholders and pledged, "We will make the recovery of your losses our top priority and do our utmost until the end."

JoongAng Ilbo has decided to enter workout proceedings.

Park Jang-hee, CEO of JoongAng Ilbo, issued a statement this afternoon, announcing, "We are pursuing a workout to maintain the continuity of content publication and to carry out the media's public duty without interruption."

He explained, "Unlike court receivership led by the court, a workout is a process of management normalization that resolves temporary liquidity issues and improves the financial structure through discussions with creditors." He added, "This is a self-help effort to preemptively block the risks of our affiliates."

◇ Korea Investors Service and NICE Investors Service Downgrade JTBC's Credit Rating to 'D'... JoongAng Ilbo's Credit Rating Also Downgraded

Amidst this, domestic credit rating agencies have collectively downgraded JTBC's credit rating immediately after its default.

Korea Investors Service [034950] lowered the credit rating for JTBC's unsecured bonds from the previous C grade to D grade today.

The credit ratings for commercial paper and electronic short-term bonds were also downgraded from C to D, respectively.

NICE Investors Service downgraded JTBC's unsecured bond credit rating from CCC to D, and its short-term credit rating from C to D.

A credit rating of D indicates a state of default where principal or interest payments are impossible.

Korea Investors Service and NICE Investors Service cited JTBC's filing for commencement of corporate rehabilitation proceedings with the Seoul Rehabilitation Court today as the reason for this adjustment.

Korea Ratings has collectively lowered the credit ratings for commercial paper and electronic short-term bonds of Megabox JoongAng, SLL JoongAng, and Contentree JoongAng.

Megabox JoongAng and Contentree JoongAng were downgraded from B to C, and SLL JoongAng from B to B-, respectively. These companies were also placed on a watchlist (under review for downgrade).

The credit rating of JoongAng Ilbo, the parent company of JoongAng Group, has also declined.

Korea Investors Service lowered JoongAng Ilbo's unsecured bond credit rating from BB+ to B- and placed it under negative review. The credit ratings for commercial paper and electronic short-term bonds were lowered from B+ to C.

The rationale for these rating assessments cited an expansion of business and financial uncertainties due to the materialization of affiliate liquidity risks, and the need for monitoring liquidity response trends.

Korea Ratings lowered JoongAng Ilbo's unsecured bond rating from BB to B and included it on the watchlist (under review for downgrade).