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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] Mirae Asset Securities is in the process of offloading 400 billion won worth of convertible bonds (CB) issued by HYBE. However, a series of negative developments surrounding the company has shaken institutional investor confidence. If the resale effort fails, Mirae Asset Securities could end up holding the entire CB issuance, exposing the firm to potential losses if HYBE's stock price declines.
Convertible bonds are debt instruments that grant the holder the option to convert them into shares at a predetermined price, known as the conversion price. If the current stock price exceeds the conversion price, investors can convert the bonds into shares and sell them for a profit. Conversely, if the stock price falls below the conversion price, converting the bonds would result in a loss, often prompting investors to demand early repayment.
According to the investment banking (IB) industry on the 4th, Mirae Asset Securities has been working to sell HYBE's 400 billion won CB issuance. While approximately half of the bonds had been sold by the end of last month, progress has slowed as some institutional investors reportedly withdrew or postponed their investment decisions.
The shift in investor sentiment stems from a string of controversies surrounding HYBE. Most notably, NewJeans, a girl group under HYBE’s subsidiary ADOR, recently announced the termination of their contract with the agency. Additionally, HYBE Chairman Bang Si-hyuk has come under scrutiny for reportedly earning 400 billion won through agreements made with private equity funds (PEFs) during the company's IPO four years ago.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
