Nomus, an entertainment technology company listed on the KOSDAQ in November 2024, primarily utilizes intellectual property (IP) from artists such as singers. However, the company is now facing a significant loss after entering a contract with Cha Ga-won, chairman of the Piak Group, at the end of last year. The estimated loss amounts to 24.2 billion won, nearly double the company's annual net profit from the previous year.
In light of this situation, Nomus recently decided to issue 40 billion won in convertible bonds (CB). While the company claims this move is aimed at securing funds for global business expansion, some speculate it may be an attempt to cover losses related to Cha Ga-won.
According to the financial investment industry, Nomus announced on July 24 its decision to issue the third series of non-guaranteed, non-interest-bearing, and non-voting convertible bonds worth 40 billion won. The payment date was set for August 3, and the entire amount raised will be used for operational funds. The company plans to invest 10 billion won in 2026, 15 billion won in 2027, and another 15 billion won after 2028.
The conversion price for the bonds is set at 15,520 won per share, reflecting a 40% premium over the reference stock price. This is approximately 38.4% higher than the closing price of 11,210 won prior to the announcement. There are no provisions for adjusting the conversion price due to stock price declines. If all bonds are converted into shares, 2,577,319 new shares will be issued, representing 19.15% of the total shares outstanding. The conversion request period is from August 3, 2027, to July 3, 2031. The company stated that the purpose of the CB issuance is to secure new artist IP and expand overseas operations, but it did not disclose specific plans for the 40 billion won raised.
Market speculation regarding the purpose of the CB issuance is rife, especially in light of the significant losses Nomus incurred from its dealings with Cha Ga-won. Nomus had provided 24.2 billion won as an advance payment for a project involving the use of IP from its affiliated artists, but after the contract was not fulfilled, the company filed a fraud complaint against Cha in November. Cha was arrested and transferred on August 7.
An industry insider pointed out, “Given the situation where funds were lent to Cha, the uncertainty surrounding the recovery of the losses raises concerns that existing shareholders may bear the burden of the CB issuance.” While there is currently no immediate impact on shareholders, if the stock price exceeds the conversion price after the conversion request period begins in August next year, up to 2,577,319 new shares could be issued, leading to potential dilution for existing shareholders.
In response, Nomus stated, “Rumors that the CB issuance is intended to cover losses related to Cha Ga-won or to supplement liquidity are entirely unfounded. We are currently taking necessary measures to recover the advance payment.” The company added, “Before the CB issuance, we had approximately 20 billion won in cash assets and had secured sufficient liquidity. The conditions for this CB issuance would not have been met if there were liquidity crises.”
As of the end of June, Nomus reported cash and cash equivalents of 6.37458 billion won, a decrease of about 4.7 billion won from 11.1781 billion won at the end of the previous year. In contrast, total liabilities increased by about 3.5 billion won to 15.246662 billion won from 11.7065 billion won at the end of the previous year.
* This article has been translated by AI.
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