이 기사는 2020년 02월 12일 08:00 thebell 에 표출된 기사입니다.

South Korea’s Netmarble has secured a loan, instead of issuing bonds, to fund the acquisition of Woongjin Coway, reaffirming its intention to maintain a net cash position.

The mobile gaming giant has raised 550 billion won – or about 12 percent of the book value of the company’s equity at the end of 2018 – in the short-term loan, according to a regulatory filing last Friday. With the new loan, the company’s short-term borrowings would increase to 678.2 billion won from 128.2 billion won at the end of 2019.

“The proceeds from the loan will be used to finance the acquisition of Coway,” Netmarble said in a filing. “We intend to fund [the acquisition] mostly through existing cash resources but leave some resources for future investment opportunities with this short-term loan.”

In December 2019, Netmarble signed an agreement to buy a 25 percent stake in Coway from Woongjin Group for 1.74 trillion won and paid 10 percent of the transaction value. Now with the short-term loan of 550 billion won and its current cash and cash equivalents of 1.2 trillion won as disclosed on its separate financial statement, the company appears to have sufficient funds to pay the remaining amount, which is due on Tuesday.

Netmarble’s conservative financial policy suggests that the company has chosen the short-term loan over a bond offering with an intention of quickly repaying debt to move back to a net cash position. Since the listing of its shares on the local stock market in May 2017, Netmarble has maintained zero short-term borrowing until the third quarter of 2019.

Big Hit Entertainment’s planned initial public offering (IPO) is also a positive factor for Netmarble, which is the second largest shareholder in the label behind mega-popular boy band BTS. Currently, the entertainment company’s IPO value is estimated to be well over four trillion won among analysts.

This represents that the value of a 25 percent stake owned by Netmarble could rise to above one trillion won with an actual flotation expected later this year or early next year. The company is less likely to exit its investment in Big Hit Entertainment given the strategic relationship between the two companies.

However, some industry watchers expect that Netmarble may consider divesting part of its stake later as it has used up almost all of its cash reserves to acquire Coway, which is unprecedented in the country’s history.

Netmarble is unlikely to borrow more money, at least in the short term. “We plan to use existing cash resources to pay the acquisition costs,” the company said last December. “There are no concerns about financing as we generate 300 billion to 400 billion won of EBITDA each year.”

Netmarble is in a solid financial position, with an average operating margin of 16 percent for the past five-year period ended on June 30, 2019. Its debt-to-equity ratio is about 24 percent as of September 2019, which is lower than its peers.

The company’s cash reserves are also on the rise. According to its separate financial statement, cash and cash equivalents increased to 1.24 trillion won at the end of September 2019 from 118.7 billion won at the end of December 2016. Also, on a separate basis, its reserve ratio reached 38,516 percent at the end of 2018.

Netmarble also has plenty of cash on hand on a consolidated basis. According to its consolidated financial statement, the company held cash and cash equivalents of 1.87 trillion won and short-term financial instruments worth 386.6 billion won as of the end of September 2019. Reserve ratio was above 54,000 percent, though some of these cash reserves are held by the company’s overseas subsidiaries and therefore not promptly available for use.

(By reporter Suh Ha-na)