JoongAng Ilbo Begins Workout Process, Plans Sale of Management Rights

JoongAng Ilbo, currently facing a liquidity crisis, received approval to begin a corporate workout process today (July 10).

According to the financial sector, financial creditors, including the main creditor bank Hana Bank, held their first meeting today and agreed to initiate the workout process through a written resolution.

Under relevant laws, a workout process begins when creditors holding at least three-quarters of the total financial debt agree to the plan.

At today's meeting, consent from creditors representing over 75% of the debt was secured by 6:00 p.m.

As a result, the exercise of creditor rights has been suspended for three months, allowing the company to avoid court-led corporate rehabilitation procedures.

Moving forward, JoongAng Ilbo will establish a management normalization plan based on an audit by an accounting firm.

The plan will then be implemented following the approval process by the creditors.

Previously, JoongAng Ilbo filed for a workout with its creditors on June 19, following a credit rating downgrade and liquidity crisis triggered by the management crisis of the JoongAng Group.

Unlike five other JoongAng Group affiliates—JTBC, holding company JoongAng Holdings, Contentree JoongAng, Megabox JoongAng, and JoongAng P&I—which filed for court rehabilitation, JoongAng Ilbo stated its intention to pursue a workout, saying it would "resolve temporary liquidity issues and improve its financial structure through consultations with creditors."

The self-rescue plan presented by JoongAng Ilbo to its creditors includes generating sustainable operating cash flow through high-intensity cost-cutting, the sale of real estate assets, and the sale of management rights.

As part of its cost-cutting measures, the company proposed a freeze on new hiring, the partial return of executive salaries, the resignation of some executives, a reduction in newspaper circulation, and the suspension of non-essential investments.

The company also plans to expand revenue sources through newspaper advertising, the apartment elevator media platform "TownBoard," and outdoor advertising, while aiming to increase subscribers for its digital paid subscription service, "The JoongAng Plus," from 70,000 this year to over 140,000 by 2029.

Furthermore, it announced plans to raise a total of 66.4 billion won through the sale of 100% subsidiary stakes and land in Taean-gun, Chungcheongnam-do.

Notably, JoongAng Ilbo stated that it would transfer the management rights of the current owner family through discussions with various potential buyers.

The largest shareholder of JoongAng Ilbo is JoongAng Holdings (64.7% stake), and the shares of JoongAng Holdings are held by the owner family, including JoongAng Group Vice Chairman Hong Jeong-do (55.8%), Contentree JoongAng CEO Hong Jeong-in (37.2%), and JoongAng Holdings Chairman Hong Seok-hyun (7.0%).

(Photo courtesy of JoongAng Group, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.