"Debt 37 Times Greater Than Equity": JTBC Faced Severe Financial Crisis

As key affiliates of the JoongAng Group, including JTBC, have filed for court receivership due to a liquidity crisis, financial authorities are investigating whether corporate bonds and electronic short-term bonds issued by JTBC were sold through incomplete sales practices.

According to financial authorities, the Financial Supervisory Service (FSS) is focusing on whether there were instances of incomplete sales, specifically examining the adequacy of due diligence by lead underwriters and potential violations of the duty to disclose financial risks during the issuance of JTBC's corporate bonds and electronic short-term bonds.

The scope of the inspection covers short-term debt securities, including corporate bonds, electronic short-term bonds, and commercial paper issued by JTBC last year and this year.

According to the 2025 business report submitted by JTBC to the Financial Supervisory Service, the company issued a total of 259 billion won in corporate bonds, electronic short-term bonds, and commercial paper last year.

Furthermore, JTBC issued an additional 93 billion won in unsecured public bonds in February of this year, just four months before its key affiliates filed for court receivership.

The FSS is focusing on whether the securities firms involved sufficiently verified JTBC's financial situation and the liquidity risks of the entire group at the time of issuance, and whether they properly explained these risks to investors.

According to the business report, as of the end of last year, JTBC's consolidated accumulated deficit stood at 703.3 billion won, while its total equity was only 19 billion won.

This indicates a severe situation where the company's losses were a staggering 37 times greater than its remaining assets.

If JTBC or the lead underwriters were aware of the possibility of a rapid deterioration in the company's financial health or the risk of entering court receivership, but failed to properly disclose this in the investment prospectus or downplayed the risks to attract investors, it could constitute incomplete sales.

In particular, asset-backed electronic short-term bonds have been identified as a direct cause of this liquidity crisis, a structure similar to that of Homeplus, which also underwent corporate rehabilitation procedures.

JTBC failed to repay a total of 20.6 billion won in asset-backed loans raised through special purpose vehicles (SPVs) Miru Second and Jeil JTBC Second—specifically 5.6 billion won for Miru Second and 15 billion won for Jeil JTBC Second—upon maturity. Following this default, its long-term credit rating plummeted from BBB to CCC, and its short-term credit rating dropped from A3 to C, both falling to speculative (junk) levels, which triggered the liquidity crisis.

Asset-backed electronic short-term bonds are a method where a company transfers its assets or receivables to an SPV, which then issues short-term bonds based on these underlying assets to raise funds from investors.

It is a structure that secures cash by accelerating future cash flows through a type of "paper company."

In addition to the 20.6 billion won that matured on June 12, hundreds of billions of won in borrowings were scheduled to mature next month; however, with the commencement of court receivership, the repayment process is expected to be effectively suspended.

Reported by Kim Minjeong | Video by Ahn Jun-hyeok | Graphics by Lee Soo-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.