JTBC sale process gathers pace...2,600% debt-to-equity ratio a valuation wildcard [fn Market Watch]

[Financial News] JTBC, a general programming channel undergoing corporate rehabilitation, will issue a sale notice this month and begin seeking a new owner. While 5–6 potential bidders have expressed interest, its debt-to-equity ratio of around 2,600% and the separation of its core content production assets have emerged as key factors in determining the purchase price.
According to investment banking (IB) industry sources on the 14th, JTBC has selected EY Han Young as its sale advisor and plans to issue a sale notice this month. It is pursuing a sale through M&A before approval of its rehabilitation plan. JTBC had previously contacted 5–6 potential buyers, and companies in sectors beyond broadcasting and media are also reportedly interested.
The key issue is its financial structure. JTBC’s consolidated revenue for the first half of this year rose to 190.1 billion won from 182.2 billion won in the same period last year, but its operating loss more than doubled, widening from 11.3 billion won to 26.6 billion won. Its debt-to-equity ratio is also cited at around 2,600%. In June, it defaulted after failing to repay 20.6 billion won in asset-backed borrowings.
In particular, the separation of its core content assets is a factor in assessing the company’s value. A separate affiliate, SLL JoongAng, handles production and distribution of JTBC’s major dramas and variety shows.
The burden of repaying rehabilitation claims is also substantial. Since pre-approval M&A hinges on using the acquisition price to repay creditors and improve the company’s financial structure, the creditor recovery rate and the amount of additional funding the buyer provides are expected to be key to completing the deal.
[email protected] Kim Hyun-jung Reporter