Contentree Central and Megabox File for Corporate Rehabilitation Two Days After JTBC Default

Central Group affiliates have filed for corporate rehabilitation with the court, just two days after JTBC declared a default due to its inability to repay liquidity loans.

According to a report on June 15 from the Financial Supervisory Service's electronic disclosure system, Contentree Central and its subsidiary Megabox Central submitted applications for the initiation of rehabilitation proceedings, preservation measures, and comprehensive injunctions to the Seoul Rehabilitation Court on June 14. Central Holdings and Central P&I are also reported to have filed for rehabilitation on the same day.

Contentree Central stated that the reason for the application is to "normalize management and preserve the value of the company as a going concern." Following the filing, trading of Contentree Central's shares has been suspended. The court will review the applications to determine whether to initiate rehabilitation proceedings.

Earlier, on June 12, JTBC declared a default after failing to repay 20.6 billion won in liquidity loans. Subsequently, credit rating agencies downgraded the credit ratings of JTBC and major affiliates of Central Group.

NICE Investors Service downgraded JTBC's long-term credit rating from BBB to CCC and its short-term rating from A3 to C. The long-term credit rating of the JoongAng Ilbo was also lowered from BBB to BB-, while the short-term rating of its printing and distribution subsidiary, JoongAng Ilbo M&P, fell from A3 to B-.

Recently, Central Group has been seeking to sell its office buildings, including the JoongAng Ilbo building in Mapo, the JTBC building, and the Ilsan studio in Goyang, with a total value of 550 billion won. Coramco Asset Trust has been selected as the preferred negotiation partner, and a memorandum of understanding has been signed. However, the delay in completing the transaction has increased short-term debt burdens.

Contentree Central and Megabox Central are responsible for Central Group's content and theater business. Megabox Central, a major subsidiary of Contentree Central, accounts for 8.907 billion won of Contentree Central's total consolidated assets of 24.909 trillion won, representing 35.76% of the total.

With the filing for rehabilitation by Megabox Central, a financial restructuring of Central Group's entire content and theater business has become inevitable. If the court decides to initiate rehabilitation proceedings, each affiliate will undergo debt restructuring and management normalization under the court's supervision.