JR Global REIT shareholder coalition fractures as rehabilitation proceedings and KRW 468.1 billion early repayment plan collide [fn Market Watch]

[Financial News] Disagreements within JR Global REIT’s shareholder camp are coming to the fore over the company’s autonomous restructuring support (ARS) process.
While an opinion asking the court to consider initiating rehabilitation proceedings has been submitted, another shareholder group is separately pursuing an early repayment plan for KRW 468.1 billion in debt through talks with creditors. Differences are emerging over the negotiating approach and repayment schedule, amid efforts to avoid rehabilitation proceedings and normalize the company’s debt.
According to the investment banking (IB) industry on the 15th, Accountant A is said to have asked the court to consider initiating rehabilitation proceedings for JR Global REIT in an opinion submitted on the 12th. Separately, the existing shareholder coalition led by CEO Kim Hyun-wook and the group led by shareholder Choi Seok-yoon, former head of Goldman Sachs Korea, differ over how to negotiate with creditors and how to restore the company to health.
The key issues are the effectiveness of ARS negotiations and prior communication with creditors. Choi’s side has questioned the extent of consultation with creditors and the feasibility of the ARS plan pursued by the existing shareholder coalition. Its position is that a repayment plan drawn up without creditors’ consent would have limited ability to achieve meaningful debt restructuring.
Choi’s side is focused on avoiding court-supervised rehabilitation through negotiations with creditors. It has been in contact with the creditors’ lead negotiator since last September and, at a shareholder briefing on the 7th of this month, unveiled a separate negotiated plan to repay approximately KRW 468.1 billion in domestic bonds by the end of 2028.
Under the plan, approximately KRW 280.9 billion, or 60% of the bonds, would be repaid by the end of 2027, with the remaining KRW 187.2 billion repaid by the end of 2028. Interest would be paid at the rate set out in the existing agreement, while late-payment interest would be waived. This would bring the repayment date forward by 18 months compared with the company’s proposal to repay the debt in full in June 2030.
The plan is to raise the repayment funds through refinancing of the Finance Tower in Brussels, Belgium, and the sale of a stake in Manhattan assets in the United States.
The plan is to extend the lease with the Belgian government through 2046 and then pursue refinancing worth 750 million euros, using the additional funds secured after repaying existing loans to repay domestic bonds. It also aims to raise KRW 130 billion to KRW 150 billion through the sale of Manhattan assets.
However, neither the lease extension with the Belgian government nor the additional borrowing has been finalized. Annual funding shortfalls are also expected under Choi’s plan, making overseas asset sales and the refinancing terms offered by financial institutions likely to determine whether the early repayment plan can be implemented.
An IB industry source familiar with the matter noted, “ARS is a mechanism that gives creditors and debtors time to avoid the commencement of rehabilitation proceedings through negotiations, so communication with creditors and their willingness to accept a plan are as important as the figures in the repayment proposal.” The source added, “With shareholders divided, the key is which plan can lead to actual funding and an agreement with creditors.”
The source added, “As disagreements among shareholders and internal opposition to moves to push unilaterally for rehabilitation proceedings grow, the court’s decision and the creditors’ position are expected to be key factors going forward, going forward.”
[email protected] Kim Kyung-ah Reporter