A consortium led by Daou Kiwoom Group and CJ Group has agreed to pay 520 billion won (about $388 million) for newly issued shares in JoongAng Ilbo, the Seoul newspaper that has been in a creditor-led debt workout since July, according to The Korea Herald, citing Yonhap. The investment will make the four-company group the paper's largest shareholder.

JoongAng Ilbo announced the planned deal on Wednesday, Nov. 4, and the two sides were scheduled to sign the agreement on Thursday, the Herald reported. For investors in Asia, the sale is one of the first concrete steps in untangling JoongAng Group, a media conglomerate whose problems have spread from its broadcaster to its flagship newspaper, and it pulls two of Korea's largest retail and entertainment groups deeper into the news business.

Who is buying JoongAng Ilbo, and how

Daou Technology, part of the Daou Kiwoom financial and technology group, holds 36.5% of the consortium, according to the Herald. CJ Corp. has 35.7%, Shinsegae Inc. 14.1% and recruitment platform operator Saramin Co. 13.7%.

The buyers are not paying a seller. The deal is structured as a third-party allotment of new shares, so the full 520 billion won goes into JoongAng Ilbo itself to repay debt and steady its finances, Korea JoongAng Daily reported when the consortium was picked on Oct. 19. JoongAng Daily is an affiliate of the newspaper being sold.

The final figure is above the roughly 500 billion won the group was reported to have offered at that stage. Bloomberg, in a report carried by The Star, cited Korea Economic Daily as saying most rival bids fell between 300 billion and 400 billion won. Samil PwC, the sale adviser, said the Daou-CJ group scored highest in the final round of an open auction. According to Bloomberg, bids were judged on price, financing, balance sheet repair and job security.

The four-way structure has a regulatory logic. Korean rules bar large business groups such as Daou Kiwoom and CJ from owning more than 50% of a general daily newspaper, and splitting the stake among partners works within that cap, Bloomberg reported. CJ is not a newcomer to the shareholder register: it already held 9.24% of the paper through CJ OliveNetworks, making it the third-largest shareholder before the deal.

Why JoongAng Ilbo needed a buyer

JoongAng Ilbo's main creditor, Hana Bank, led other lenders in putting the paper into a workout program in July, after liquidity problems at its parent, JoongAng Group, the Herald said. The trouble started at the broadcasting arm. JTBC defaulted on securitized loans and sought court-led restructuring at the Seoul Bankruptcy Court in June, according to Bloomberg. The group also runs movie theaters and content studios, and its businesses are closely tied to each other financially.

The newspaper itself has been making money. Korea JoongAng Daily reported that it had the highest revenue of any Korean newspaper last year and has posted an operating profit for 13 years in a row. Neither the Herald nor the sale adviser disclosed how much debt the paper carries.

As part of the agreement, the consortium committed to keep all current employees without layoffs and to guarantee editorial independence, the Herald reported. Park Chang-hee, JoongAng Ilbo's president, said the company would work to normalize the business quickly while protecting "the rights of creditors and investors."

What the deal means for CJ, Shinsegae and Daou

For CJ, which owns the entertainment and media company CJ ENM as well as CJ Logistics, the paper adds a news outlet to a content portfolio. When it was picked as preferred bidder, CJ said it would prioritize editorial independence and build the paper's long-term competitiveness, according to Bloomberg. Daou Kiwoom spans securities, asset management, technology and webtoons. It first pursued JoongAng Ilbo alone and teamed up with CJ before the final round, Bloomberg reported, citing Yonhap.

Korean corporate control has been in play elsewhere this autumn. At Hanjin, the founding family has been buying more shares in its holding company as a rival investor builds a stake. The JoongAng deal is a different kind of transaction: new money going into a troubled company rather than a fight over existing shares.

The sale is not finished once the agreement is signed. JoongAng Daily reported that the signing would be a conditional share subscription agreement. Meetings of financial creditors and bondholders come next, then a JoongAng Ilbo board meeting and payment for the new shares. The aim is to complete the workout within this year, the paper reported, though the timetable could shift depending on talks with creditors.