Okay-pop big HYBE is being compelled to make an early compensation on KRW 400 billion (USD $293 million) in debt, and the corporate can be issuing new bonds to cowl the quantity.
In accordance with a report at South Korea’s Maeil Enterprise Information on October 10, buyers who personal KRW 400 billion-worth of HYBE convertible bonds issued in 2021 have opted for early compensation, forcing HYBE to provide you with the money by November 5.
The bonds – the third sequence of convertible bonds issued by HYBE – carry a 0% rate of interest, however have the choice to transform the bonds, upon maturity, to HYBE inventory at a worth of KRW 385,000 ($282.50) per share.
To show a revenue on the bonds, HYBE’s share worth must be larger than that degree when the bonds matured. Nevertheless, the Okay-pop big’s inventory worth has been steadily declining for the previous year-and-a-half, and closed on Wednesday (October 15) at KRW 179,500 ($131.75).
Practically all (99.95%) of bondholders of the third sequence have requested early redemption, Maeil reported, citing knowledge from the Korean Securities Depository.
At a current inside firm city corridor, newly-appointed HYBE CEO Jaesang Lee sought to quell issues concerning the firm’s monetary state. In accordance with a report at allkpop.com, Lee reportedly informed workers that the corporate has “KRW 1.2 trillion (approx. $880 million) in out there money belongings, and our monetary situation could be very wholesome.”
HYBE’s newest semi-annual report exhibits that, as of June 30, 2024, the corporate had KRW 321.45 billion ($235.8 million) in money and money equivalents, plus KRW 753.1 billion ($552.4 million) in different liquid belongings, for a complete of KRW 1.075 billion ($788.2 million). The corporate additionally reported KRW 714.22 billion ($523.8 million) in present liabilities.
Nevertheless, it doesn’t seem that HYBE is planning to attract down its money pile to cowl the bond compensation; quite, the corporate plans to refinance with a brand new bond issuance.
In accordance with paperwork HYBE submitted to DART, South Korea’s repository of company filings, the corporate’s board has accepted a brand new KRW 400 billion convertible bond issuance, to be made out there to the general public on Thursday (October 17), “for the early compensation of all the quantity of the third convertible bond.”
As with the earlier convertible bonds, these will carry a fee of 0%, however their conversion worth can be KRW 218,000, a roughly 20% premium on HYBE’s present inventory worth. The bonds will mature (i.e., can be out there for conversion to HYBE inventory) on October 17, 2029.
The bonds can be convertible to 1.83 million shares of HYBE inventory, or 4.4% of HYBE’s excellent frequent inventory. Bondholders will be capable of request early redemption as of October 17, 2027.
The overwhelming majority of the brand new bonds (KRW 390 billion) can be issued by Mirae Asset Securities, whereas the remaining KRW 10 billion can be issued by Mirae Asset Capital.
Mirae Asset Securities is South Korea’s largest funding financial institution and inventory dealer by market capitalization. The financial institution reportedly issued the earlier sequence of HYBE’s convertible bonds, and was a joint supervisor on HYBE’s IPO in 2020.
A Mirae Asset Securities official informed Maeil Enterprise Information that the financial institution doesn’t count on any difficulties within the imminent bond sale.
“We have now bought down a big a part of the amount final time, and we plan to promote down easily this time as a consequence of excessive demand from institutional buyers,” Maeil quoted the official as saying.
“Traders appear to be very excited by HYBE shares, that are undervalued.”
“Traders appear to be very excited by HYBE shares, that are undervalued.”
A Mirae Asset Securities official, as quoted by South Korean media
HYBE’s refinancing comes amid a dramatic yr for the corporate, which has seen its inventory fall greater than 25% year-to-date amid a public dispute between the corporate and Min Hee-jin, the now-former CEO of HYBE sub-label ADOR.
This previous spring, HYBE accused Min of plotting to sever ADOR from its mum or dad firm, an allegation Min has denied. Information studies steered Min was annoyed with HYBE as a result of she believed the lady group that ADOR produces, NewJeans, was being copied by ILLIT, a woman group shaped by one other Hybe sub-label, BeLift Lab.
Amid the acrimony, HYBE reported disappointing Q1 earnings, with income falling 12.1% YoY. HYBE attributed the drop to the continued hiatus of its largest Okay-pop act, BTS, whose members are serving out their obligatory navy service.
The corporate noticed a rebound in its Q2 earnings, reporting record-high income of KRW 640.5 billion ($465 million), a 3.1% improve yr on yr and up 77.5% quarter on quarter.
Nevertheless, that resulted in solely a brief spike in HYBE’s inventory worth.
Declining market worth has been an industry-wide downside in Okay-pop this yr. SM Leisure, typically thought of to be the second-largest Okay-pop firm after HYBE, has seen its inventory worth slide by practically 30% year-to-date. JYP Leisure has seen its inventory worth minimize by half for the reason that begin of the yr.
Apart from a weakening of financial circumstances in East Asia as a consequence of a slowdown in China, South Korean information studies recommend that the nation’s weak leisure sector is tied to varied movie star scandals and tensions between artists and their labels.Music Enterprise Worldwide
