[Edaily Marketin Hur Jieun Reporter] It’s thriving, generating strong profits, and even paying off its debts on time. This is the story of SLL Joongang, considered a core asset of the Joongang Group—whose major affiliates have entered receivership amid a series of liquidity crises. Recently, SLL Joongang demonstrated its ability to survive independently by repaying short-term corporate bonds on its own. However, some analysts suggest that this financial soundness is actually serving as a catalyst that may accelerate the timeline for SLL Joongang’s sale.

According to investment banking (IB) industry sources on the 27th, an attempt to extend the maturity of the acquisition financing for Praxis Capital, SLL Joongang’s second-largest shareholder, failed. Praxis made a total investment of 3000억 won when it acquired SLL Joongang’s convertible preferred shares (CPS) in 2021. During this process, Praxis raised 1300억 won from a syndicate of lenders, including Shinhan Financial Group, and the maturity date for that loan is set for the end of this month. The lending syndicate appears to have concluded that uncertainty surrounding the repayment of the acquisition financing has increased due to Joongang Group’s recent series of bankruptcy filings.

However, given the nature of private equity fund (PEF) managers—who typically do not maintain large reserves of capital—the likelihood of an early default (EOD) has increased. The lending syndicate is expected to proceed with recovering funds by disposing of the SLL Joongang shares held as collateral. An investment banking industry source explained, “Amid the spread of group-wide risks, the lending syndicate is prioritizing the recovery of funds rather than taking on additional risk.”

Consequently, a joint bulk sale of the shares held by SLL Central’s largest shareholder, ContentreeJoongAng corp.(036420) (53.82%), and those held by Praxis Capital’s special purpose company (SPC), Praxis Chateau Holdings (18.36%), is being strongly considered. This is because ContentreeJoongAng corp. is currently undergoing rehabilitation proceedings and urgently needs to secure liquidity; moreover, selling only the stake held by the second-largest shareholder—which carries no control premium—would make the asset unattractive to buyers.

Accelerated Sale Driven by Proof of “Prime Asset” Status

SLL Joongang is the Joongang Group’s content production subsidiary and is regarded within the group as a “cash cow” with strong cash generation capabilities and high intellectual property (IP) value. In particular, it is reported that the company has been able to maintain its independent fundamentals despite the chain of crises affecting major Joongang Group affiliates, thanks to a shareholders’ agreement reached during its external investment round in 2021 that severed the group’s joint liability ties.

In fact, on the 24th, SLL Joongang repaid 5 billion won in short-term electronic bonds that had matured using its own cash reserves. Amid the collapse of affiliated companies one after another, this carries significance beyond a simple repayment. Observers note that the company has demonstrated to the market that its own cash-generating capacity remains robust, even amidst the group-wide liquidity crisis.

Paradoxically, SLL Joongang’s sound financial structure is being interpreted as a positive factor for a potential sale. While SLL Joongang’s own fundamentals are solid, a sale is expected to be inevitable due to the complex web of interests involving its corporate governance and external capital.

Maturity Burden in the Second Half… Tencent’s Moves Draw Attention

Of course, SLL Joongang still faces challenges. Short-term notes totaling 3.5 billion won and 4.0 billion won are set to mature in July and August, respectively, and the key question is whether the company can continue to repay these obligations on its own in the second half of the year. With ongoing credit risks stemming from the group, there may be limits to covering all maturities solely with its own cash flow. This means that both the largest shareholder, ContentreeJoongAng corp., and the financial investors (FIs) are feeling pressure to sell now, while the company’s valuation is at its peak.

The key point to watch is the move by China’s Tencent, which joined as a strategic investor (SI). Since Tencent made an equity investment alongside Praxis in 2021 to secure content IP, it is not currently under immediate pressure to repay funds. However, various scenarios are circulating within the industry regarding whether Tencent will participate in an exit (recouping its investment) or act as a potential buyer if the company is put up for sale.

An investment banking industry source explained, “The company has strong internal cash flow, so its value as an asset is high,” adding, “If the group-related risks can be isolated, it could be viewed as an attractive acquisition target.”