This article appeared on "Signal," the capital markets compass, at 10:47 on July 5, 2026.
The acquisition financing lenders for Praxis Capital Partners, the private equity (PEF) firm that invested in SLL Joongang, have declared an event of default (EOD). To recover the principal, a sale of management control of SLL Joongang led by Praxis appears inevitable going forward.
According to the investment banking (IB) industry on the 5th, the lending group, including Shinhan Securities and Shinhan Bank, saw an EOD occur as the acquisition financing it provided to Praxis Chateau Holdings passed its maturity. The lenders must now classify the acquisition financing as a managed asset and set aside loan-loss provisions accordingly. Praxis Chateau Holdings is a special purpose company (SPC) established by Praxis to invest in SLL Joongang. In 2021, Praxis invested 300 billion won in SLL Joongang's convertible preferred stock (CPS), of which 130 billion won was raised through acquisition financing.
As recently as the first half of this year, the lenders had been considering extending the maturity. Contentree Joongang, SLL Joongang's parent company, planned to raise funds from Ares Management and then buy Praxis's stake in SLL Joongang, allowing Praxis to repay part of the acquisition financing with those proceeds and extend the maturity. However, immediately after the Ares investment fell through, Joongang Group affiliates entered rehabilitation one after another, scrapping the plan.
With the EOD declaration, the lenders secured the right to recover the loan principal. Although it is common to recover principal by selling the shares of the invested company held as collateral, analysts say immediate action is difficult in this case. Praxis Chateau Holdings holds only about 18% of SLL Joongang, making a sale realistically difficult.
The alternative the lenders can rely on is a sale of management control of SLL Joongang led by Praxis. Praxis had secured a condition triggering an interest-rate penalty clause if SLL Joongang's initial public offering (IPO) failed within the agreed period, and as the listing was delayed, it amended the shareholders' agreement this year. Through this, it took an additional roughly 32% stake in SLL Joongang held by Contentree Joongang as collateral.
However, it is expected to take considerable time before Praxis can actually pursue a management control sale. On the 30th of last month, the Seoul Bankruptcy Court decided to commence rehabilitation proceedings for four affiliates: Joongang Holdings, Contentree Joongang, Joongang P&I, and Megabox Joongang. Praxis's top priority is to persuade the court and receiver, who hold the reins, to bring about a sale of management control of SLL Joongang.
If the sale process begins, the lenders' chances of recovering their principal rise. SLL Joongang's enterprise value is cited at around 1 trillion won, and the lenders are senior investors who can recover their principal first. Even if the company is sold at a discounted valuation, recovery poses no problem for the lenders.
Meanwhile, SLL Joongang is preparing asset securitization to overcome the group's liquidity crisis. Led by the sale of its stake in "Tving," subsidiary studios and intellectual property (IP) have been put up for potential sale. An IB industry official said, "Even if SLL Joongang sells assets, the amount it can pocket is limited and it will take a long time," adding, "From the investors' standpoint, unless it is a sale of management control, it is hard to become a solution for recovering the principal."
