[Funding] NextenBio Invests in Non-Bio Dining Company 'Didim' CB

[Asia Economy Reporter Jang Hyowon] Nexton Bio, which announced its transformation into a bio company, has acquired convertible bonds (CB) of Didim, a dining company with little relation to bio. Questions are being raised about the investment direction as Act CB, a related company of the largest shareholder, also acquired the bonds.

According to the Financial Supervisory Service's electronic disclosure on the 11th, Didim announced on the 6th that it would issue CB worth 3 billion KRW. The nominal interest rate and maturity interest rate of the CB are 1% and 2%, respectively. The purpose of raising funds is operating capital. It is analyzed that the decision to issue CB was made to secure liquidity that decreased due to poor performance last year.

Didim operates dining brands such as ‘Yeonansikdang’, ‘Shin Mapo Galmaegi’, ‘Gorae Sikdang’, and ‘Tokyo Hana’. After listing on KOSDAQ through a SPAC merger in 2017, its sales exceeded 120 billion KRW in 2019 through direct store and franchise operations and distribution business.

However, due to the impact of COVID-19 last year, sales shrank to the 80 billion KRW range, and it recorded an operating loss for the first time since listing. Last year, Didim's operating loss and net loss were approximately 13.3 billion KRW and 28.1 billion KRW, respectively.

The large-scale losses also weakened its financial condition. As of the end of last year, Didim's debt ratio was 1623.7%, rising by 1366.5 percentage points from 257.2% in 2019. The net loss caused deficit, lowering total equity. Didim's total assets amount to 89.6 billion KRW, while liabilities reach 84.4 billion KRW.

Accordingly, Didim's founder CEO Lee Beomtaek sold all his shares to Jeongdam Distribution for 27.7 billion KRW in March. Jeongdam Distribution operates a franchise dining company called ‘Baedalsamgyeop Dwaeji Doeji’. As of 2019, Jeongdam Distribution recorded sales of 1.6 billion KRW and net profit of 72 million KRW. It is understood that the company does not have abundant acquisition funds. Therefore, it is interpreted that external funding such as CB issuance was decided.

The puzzling point is that the recipient of Didim's CB investment is a bio venture investment company. The CB issuance target of Didim is NexID Lab. NexID Lab is a corporation established on the 13th of last month by Nexton Bio with an investment of 10 billion KRW. Nexton Bio holds 100% of the shares. Its main business purpose is discovering and evaluating domestic and international pharmaceutical bio venture companies.

Nexton, which operates CNC automatic lathe production business, changed its largest shareholder to Studio Santa Claus Entertainment in March. Afterwards, it announced its entry into the bio business, changed its name to Nexton Bioscience, and established its subsidiary NexID Lab. The first investment of NexID Lab is the acquisition of Didim's CB.

A Didim official stated, “The new largest shareholder Jeongdam Distribution is in the same industry, so we plan to strengthen the home meal replacement (HMR) business along with the existing direct stores and franchises,” adding, “We have not considered the bio business.”

Meanwhile, Nexton Bio also acquired 15 billion KRW worth of CB from Act, a KOSDAQ-listed company related to the changed largest shareholder, on the 6th. Act is a manufacturer of flexible printed circuit boards used in smartphones and tablet PCs.