JoongAng Ilbo will enter a workout, or corporate restructuring process, after securing the consent of its creditors. Unlike five JoongAng Group companies including JTBC, which filed for court receivership, JoongAng Ilbo has pursued a workout, a creditor-led restructuring procedure.
According to the investment banking (IB) industry on the 10th, financial creditors including Hana Bank held their first council meeting that day and agreed to launch JoongAng Ilbo's workout. Under the law, the process can begin if creditors holding at least 75% of the council's combined financial claims agree to the workout. At the council meeting that day, consent was secured from more than 75% based on claim value. A workout is a restructuring procedure in which creditors lead efforts to improve the financial structure without the court's compulsory intervention. JoongAng Ilbo applied for a workout to its creditors on the 19th of last month.
Following the decision to launch the workout, creditors' exercise of their claims will be suspended for three months. The newspaper will also be able to avoid the court's corporate rehabilitation process. JoongAng Ilbo must later establish a management normalization plan after due diligence by an accounting firm, and implement the plan with the consent of the creditors. JoongAng Ilbo presented self-rescue plans to the creditors including continuous generation of operating cash flow accompanied by intensive cost reduction, sale of owned real estate, and sale of management control stakes.
Cost reduction measures included suspending new hiring and having executives return part of their salaries. JoongAng Ilbo also mentioned the retirement of some executives, a reduction in the scale of newspaper publication, and the suspension of non-essential investments. For expanding revenue sources, it proposed increasing sales through newspaper advertising, "Townboard," an apartment elevator media platform, and outdoor advertising. A plan was presented to increase subscribers to its digital paid subscription service "The JoongAng Plus" from 70,000 this year to 140,000 by 2029, along with a plan to raise 66.4 billion won through the sale of stakes in wholly owned subsidiaries and the sale of land.
JoongAng Group has been pursuing the sale of its headquarters to secure liquidity. A plan to transfer the JoongAng Ilbo management control held by the owner family is also being pursued in discussions with several prospective buyers.
