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[Alpha Biz=(Chicago) Reporter Paul Lee] Netmarble tried to raise $700 million in funds by issuing exchange-traded bonds (EB) to foreign institutional investors, but eventually withdrew them due to cold sentiment.
According to the investment banking (IB) industry on the 9th, Netmarble began the process of issuing EBs to foreign investors until last week, but withdrew on its own. This is because poor participation is expected in the pre-taping process to predict demand. Netmarble is said to have sought to raise $ 600 million to $ 700 million in foreign currency to exchange its 8.88% stake in NCsoft. EB is a bond that investors can exchange for the issuer's stock after a certain period of time. If you do not want an exchange, you can get a bond interest rate and repay it at maturity.
Currently, the market value of NCsoft shares held by Netmarble is about 614.6 billion won. NCsoft's stock price, which was formed at 432,500 won by early March, fell about 27% to 315,000 won on the 9th, and the exchange value also fell significantly. Netmarble said, "We withdrew the issuance of EB in search of a better procurement plan for the company."
Netmarble's large-scale financing is aimed at responding to borrowings due this year. As of the first quarter of this year, Netmarble's short-term borrowings due within a year amounted to KRW 1.6333 trillion. Of the total, 1.3487 trillion won is acquisition financing borrowed from Hana Bank and others last year when it acquired SpinX, a U.S. social casino company. As of October 6 this year, the interest rate stands at 6.43%. As of the end of the first quarter, cashable assets were only 528.4 billion won, making additional borrowing inevitable.
In addition to the financial burden caused by M&A, the financial structure is accelerating as the deficit continues for six consecutive quarters in the main business. Netmarble recorded sales of 602.6 billion won and operating loss of 28.2 billion won in the first quarter. Compared to the same period last year, sales fell 5% and operating losses increased 106%. Securities firms' second-quarter consensus is also expected to post an operating loss of KRW 44.9 billion due to a bigger deficit compared to the previous quarter.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
