A crucial decision on the future of the faltering Yongsan project, the nation’s biggest property development worth about 31 trillion won ($30 billion), is expected to come this week as the developer and major shareholders are set to hold a separate meeting.
The state-run KORAIL, the largest shareholder in the project, will hold a board meeting Thursday to decide whether to back the issuance of asset-backed commercial paper worth 300 billion won ($278 million), one of last resorts to finance the project for now.
KORAIL has clashed with Lotte Tour Development, the second largest shareholder of the project, opposing the ABCP issuance, claiming that the gigantic development project, aimed at building an international business district by 2016, had to be reviewed from the basics and to take a gradual development approach in the prolonged timeline.
KORAIL’s approval is essential to issue the ABCP as the commercial paper has to be collateralized by KORAIL’s assets for issuance.
Dream Hub, the decision-making organization of the Yongsan project composed of 30 shareholders, will also host a board meeting on Friday to deal with the decision of KORAIL’s board.
The project has been in limbo since late last year, mainly due to conflict between the top two shareholders, and faces bankruptcy unless Dream Hub attracts additional funds in the first quarter of this year.