KORAIL resolved to resuscitate the moribund Yongsan redevelopment project within the month by injecting 260 billion won ($234 million) and scaling back the construction.
With the amended blueprint, which hopefully will take effect on April 1, KORAIL is to temporarily operate a special countermeasure task force, jointly with the Seoul Housing Corporation and private investor representatives.
The state-run rail operator that is the majority shareholder on Friday summoned all 30 private investor firms and suggested an emergency business normalization plan.
In other restructuring plans, KORAIL also downsize the entire business, reflecting the stagnant real estate situation, and up the project’s authorized capital from 1 trillion won to 5 trillion won, officials said.
“The key point of our suggestion is to cut down on the excessive privileges and to remove the bubbles from the project,” said KORAIL president Chung Chang-young.
“Once we alter the business structure, our top priority will be the compensation issue for the Seobuichon-dong residents.”
The rail operator also requested the Seoul Metropolitan Office to hold a referendum and accordingly ease off the regulations in the disputed district.
In order to financially back its action plan, KORAIL decided to purchase 260 billion won worth of convertible bonds from the project financing vehicle, Dream Hub.
It also demanded that key private investors, such as Samsung C&T, give up their exclusive rights on the construction of landmark buildings and step out of the project.
Though KORAIL’s solution requires investors to undertake financial damages, it is considered the only remaining means to prevent the entire project from going bankrupt. The investors have until March 21 to approve of the plan and to write a letter of agreement.
Dream Hub plunged into a loan interest default on Wednesday, failing to pay back 5.2 billion won ($4.7 million) in interest.
By Bae Hyun-jung (email@example.com