[At a Crossroads: Listed Company] Maxlotec Faces Urgent Need for Funding Amid Massive Losses

[Asia Economy Reporter Jang Hyowon] Maxlotec urgently needs to raise funds after recording a large-scale loss in the third quarter. Having previously failed to raise 20 billion KRW, attention is focused on whether the company can secure funding this time.

According to the Financial Supervisory Service's electronic disclosure on the 25th, Maxlotec recorded an accumulated operating loss of 13.6 billion KRW in the third quarter of this year, an increase of 655.6% compared to the same period last year. Net loss for the same period also rose by 475% to 13.8 billion KRW. The company posted a net loss of 6.7 billion KRW in the third quarter alone.

Maxlotec operates factory automation equipment businesses, mainly gantry robots and industrial robots, as well as automobile engine cylinder block and head machining. As of the third quarter this year, sales from the automation equipment business and automobile parts business decreased by 46.2% and 61.1%, respectively.

As net losses increased, accumulated deficits also grew. The deficit, which was 15.6 billion KRW at the end of last year, expanded by 89.1% to 29.5 billion KRW at the end of the third quarter this year. With the increase in deficits, total equity decreased to 20.3 billion KRW. Maxlotec’s capital stock is 16.6 billion KRW, and if losses of a similar scale to the third quarter continue in the fourth quarter, the company could fall into capital erosion.

Accordingly, Maxlotec is pursuing a fundraise of 10 billion KRW. On September 29, Maxlotec announced the issuance of convertible bonds (CB) worth 5 billion KRW. The payment deadline for these CBs was until the 28th of last month, but the payment was postponed once to the 27th due to a change in the issuer from Blackswan Investment to DIC Korea.

DIC Korea is a joint venture between Korea and Vietnam, known to be engaged in construction and real estate development projects locally in Vietnam. The CEO of DIC Korea is Yoo Gitaek, who currently serves as an inside director at GV.

Earlier in June, Maxlotec attempted but canceled the issuance of CBs worth 20 billion KRW. As a result, the acquisition of Naver System, which had been planned since April, was canceled, and the company was designated as a non-compliant disclosure company.

There is a possibility that the 5 billion KRW CB issuance this time may also have its conditions changed or payment delayed. This is because the conversion price is set at 3,560 KRW, while Maxlotec’s stock price closed at 2,145 KRW the previous day.

Along with the CB issuance, Maxlotec is also pursuing a third-party allotment capital increase worth 5 billion KRW. On the 23rd, Maxlotec announced that it would conduct a third-party allotment capital increase at 1,955 KRW per share targeting Hello World Entertainment.

Hello World Entertainment is a company established with a capital of 50 million KRW and is a related party company of Kim Yonghun, CEO of Golden Some Pictures, who was appointed as an inside director of Maxlotec in September.

A company official said, “The CB issuance and capital increase will proceed without any issues.”