Aftermath of JoongAng Group’s Rehabilitation Proceedings... Uncertainty Looms Over Financial Investors’ Exit

ContentreeJoongAng and MegaboxJoongAng Apply for Rehabilitation with Seoul Bankruptcy Court
Concerns Grow for JKL, Praxis, and Korea Investment PE

Just two days after JTBC declared a default, several affiliates of JoongAng Group have entered rehabilitation proceedings, increasing uncertainty for financial investors (FIs) who invested in JoongAng Group's content and theater assets. Since 2021, private equity funds (PEFs) and global investors who bet on the rising valuations of content and theaters are now directly impacted by JoongAng Group’s liquidity crisis.

According to the investment banking (IB) industry on June 16, it is conservatively estimated that at least 500 billion won in FI-type capital is now at risk due to JoongAng Group's rehabilitation process. This figure includes investments in Contentree JoongAng by JKL Partners and Korea Investment Private Equity (Korea Investment PE), as well as pre-IPO investments in its subsidiary SLL JoongAng by Praxis Capital and Tencent-affiliated Aceville. Of this total, just the convertible bond (CB) investments directly exposed to Contentree JoongAng, the entity that filed for rehabilitation, are estimated to be around 150 billion won.

JKL, Korea Investment PE Invested in CBs... Praxis Capital Invested in Subsidiary SLL JoongAng

Sangam JoongAng Ilbo and JTBC Headquarters

The most direct exposure is from FIs that invested in Contentree JoongAng itself via CBs. In 2021, JKL Partners acquired 100 billion won worth of Contentree JoongAng CBs. CBs are bonds that can be converted into shares under certain conditions. At the time, both the coupon and maturity interest rates were 0%, so the investors were aiming for conversion profits from stock price appreciation rather than interest income. However, since then, Contentree JoongAng’s stock price has fallen significantly below the conversion price, making redemption via stock conversion unlikely. Contentree JoongAng repaid 20 billion won of the CB principal at the end of 2024, but the remaining 80 billion won has had its maturity extended multiple times. By the end of June 2026, the repayment burden is reported to have grown to around 120 billion won, including interest.

Korea Investment PE is also exposed to Contentree JoongAng. In 2025, Korea Investment PE acquired 30 billion won worth of privately placed CBs issued by Contentree JoongAng. This investment was based on expectations for improved performance in content production and the growth potential of global over-the-top (OTT) streaming services. However, if the court initiates rehabilitation proceedings, the CB principal and interest repayment claims of JKL and Korea Investment PE are likely to be subject to adjustments under the rehabilitation plan. In this case, the repayment rate and whether equity conversion is required will become key issues.

Significant FI capital has also been invested in Contentree JoongAng’s subsidiary SLL JoongAng. In 2021, Praxis Capital invested 300 billion won in SLL JoongAng’s convertible preferred shares (CPS). In the same deal, Tencent-affiliated Aceville invested 100 billion won. Praxis reportedly secured an 18.36% stake in SLL JoongAng, while Aceville acquired 10.11%. The transaction was structured as a pre-IPO investment, based on SLL JoongAng’s planned initial public offering (IPO). However, the original goal of “going public within three years” was not achieved, and discussions about extending the IPO deadline have continued.

Praxis Capital’s investment is also tied to acquisition financing. Since part of the investment was financed through loans, the delay in SLL JoongAng’s IPO not only postpones equity recovery but also raises issues about repaying the acquisition financing. There had been discussion of JoongAng Group buying back part of the SLL JoongAng stake to help Praxis repay its acquisition financing, but as Contentree JoongAng became unable to raise new funds, this scenario has become increasingly unlikely.

Going forward, attention will focus on how the rehabilitation court assesses the going concern value of Contentree JoongAng and Megabox JoongAng. Depending on the rehabilitation plan, the repayment terms for CB investors may be adjusted, and FI recovery strategies such as selling SLL JoongAng shares or rebooting the IPO process could also be affected.

Contentree JoongAng and Megabox JoongAng Filed for Rehabilitation... JoongAng Ilbo Pursues Workout

On June 15, in response to liquidity problems, some affiliates and subsidiaries of JoongAng Group, including JTBC, entered court receivership (corporate rehabilitation). JoongAng Ilbo has decided to pursue a workout (corporate restructuring).

JTBC failed to repay a total of 20.6 billion won in securitized loans at maturity and officially declared a default on June 12. Two days later, on June 14, JoongAng Holdings, Contentree JoongAng, JoongAng PNI, and Megabox JoongAng filed for rehabilitation proceedings. On the same day, JTBC also filed an additional application for rehabilitation. JoongAng Holdings and Contentree JoongAng also requested a preservation order and a comprehensive injunction.

A preservation order prevents the company from disposing of assets to repay specific creditors preferentially. In contrast, a comprehensive injunction freezes creditors’ claims to prevent them from seizing or auctioning the company's main assets through enforcement, provisional seizures, or sales before corporate rehabilitation begins.

Hong Jeongdo, Vice Chairman of JoongAng Group, held a press conference that day and apologized to creditors and shareholders, saying, “Due to a combination of factors such as worsening external economic conditions, credit rating downgrades, and a resulting credit crunch, we had no other choice but to make this unavoidable decision.” He added, “We will prioritize restoring your losses above all else and will do our utmost until the end.”

JoongAng Ilbo has decided to begin workout procedures. In a statement released that afternoon, JoongAng Ilbo CEO Janghee Park said, “We are pursuing a workout to maintain the continuity of content publication and to fulfill the public responsibility of the press without interruption.” He further explained, “Unlike court-led receivership, a workout is a normalization process that resolves temporary liquidity issues and improves the capital structure through negotiations with creditors,” and described it as a self-help effort to proactively address affiliate risks.

JoongAng Group Affiliates Face Simultaneous Credit Downgrades... JoongAng Ilbo Also Downgraded

Domestic credit rating agencies downgraded JTBC’s credit rating immediately after the default.

Korea Ratings·KR and NICE Investors Service lowered the ratings on JTBC’s corporate and short-term bonds to D. A D rating is considered a default grade, indicating that principal or interest payments are in default. For JoongAng Ilbo, the rating on unsecured bonds was downgraded from BB+ to B-, and the corporate paper (CP) and electronic short-term bond ratings were lowered from B+ to C according to Korea Ratings·KR. Korea Investors Service also lowered JoongAng Ilbo’s unsecured bond rating from BB to B and placed it under review for further downgrade. Contentree JoongAng, Megabox JoongAng, and SLL JoongAng also saw simultaneous downgrades in their short-term credit ratings.

This content was produced with the assistance of AI translation services.