South Korea’s National Pension Service (NPS) and other loan providers have agreed on debt rescheduling measures for the owners of D`Live Co. (formerly C&M Co.), the country’s third largest cable TV service provider in Seoul, a move that is expected to prevent a possible loan default of 2.2 trillion won ($1.43 billion).

According to industry sources on Monday, the NPS and Suhyup Bank gave the nod to the debt rescheduling plan that includes extension of debt maturities and a debt-to-equity swap for the cable TV service provider. The NPS, the country’s largest pension fund with more than 500 trillion won in assets that had remained reluctant to approve such a plan, changed its stance at the last minute, allowing the loan providers to reach an agreement a month before the maturity of the loans.

According to industry sources, the NPS had no choice but to approve the plan amid growing concerns that a possible massive default could lead to greater losses. An unnamed official at the pension fund said the NPS reviewed the plan comprehensively and it will keep an eye on D`Live’s efforts for management improvement.

As all of the company’s 21 creditors agreed to the plan, D`Live is now getting out of a crisis situation. The cable TV service provider has reportedly been on the verge of default after some creditors like the NPS have refused to reschedule the loan worth about 1.6 trillion won that its major stakeholder Kookmin Cable Investment Inc. (KCI) borrowed in 2007 in acquisition financing to purchase the cable TV company, and the due date on the loan is arriving in July. KCI is a special purpose company set up by a number of investors including private equity funds MBK Partners, Macquarie Korea Opportunities Fund and Mirae Asset Global Investments Co. to buy D’Live. D’Live as other Korean cable TV operators has been struggling amid intensifying competition from new media including the Internet Protocol Television (IPTV) services.

The agreed measures are known to include conversion of 800 billion won worth of loans that KCI borrowed into stocks, reduction of D’Live’s loans by 200 billion won, a cut in the interest rate, and extension of loans by three years. The creditors will soon finalize details, including the debt-to-equity ratio, and aim to complete the debt-to-equity swap and loan replacement by July 29.

With eased concerns over a possible insolvency, D’Live stakeholders are expected to focus to normalize the operation of the company and soon start to look for a new buyer for the cable TV service company.

By Kang Doo-soon, Kim Hyo-hye

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]