[Funding] EightOne's CB Issuance Amount Halved with Worsened Terms

[Asia Economy Reporter Jang Hyowon] The issuance of convertible bonds (CB) by Eightone, a KOSDAQ-listed company, delayed for eight months, has been finalized. However, the issuance scale was halved, and stringent conditions such as increased interest rates and collateral provision were attached. Eightone plans to use the funds raised this time to advance its metaverse platform.

According to the electronic disclosure by the Financial Supervisory Service on the 28th, Eightone announced changes in the issuance amount, underwriters, and issuance conditions of the 9th private placement CB.

First, the total face value of the bonds was reduced by about half, from the original 8 billion KRW to 4.01 billion KRW. Additionally, the interest rate increased from a 0% coupon rate and 3% maturity rate to a 1% coupon rate and 5% maturity rate. The amount raised decreased while the interest rate increased.

The conversion price per share also dropped from 2,023 KRW to 1,492 KRW, which is analyzed to be due to the recent decline in Eightone’s stock price. The issuance target changed from individuals and general corporations to SangSangIn Savings Bank. SangSangIn Savings Bank is known for providing stock-collateralized loans and CB underwriting to listed companies, often with stringent conditions.

Collateral rights were also established for this CB. To secure the CB debt payment, Eightone provided land and buildings it owns in Gwangmyeong-si, Gyeonggi-do as collateral. The bond setting amount is 130% of the principal, totaling 5.213 billion KRW. Furthermore, 35,422,560 common shares of the Swedish company Anoto Group AB, invested in 2019, and 1.533 billion KRW in deposit funds within securities accounts were also pledged as collateral. Real estate, invested stocks, and cash were all set as collateral.

Typically, CBs are considered favorable to investors because they include conditions allowing conversion into shares if the stock price rises, enabling potential gains. Providing collateral further significantly reduces investor risk. Conversely, the issuer accepts more unfavorable conditions to raise funds.

This CB was initially decided to be issued in July last year. Since then, payments were delayed five times until the 25th. This is analyzed to be due to Eightone’s poor performance and stock price. Last year, Eightone recorded an operating loss of 3.5 billion KRW on a consolidated basis, turning to a deficit. The stock price also halved compared to the peak of 2,985 KRW in July last year. If the payment is completed on the 29th as per the revised disclosure, the issuance will conclude after about eight months.

Once the fund raising is completed, Eightone plans to invest in advancing the metaverse platform ‘moim’. Launched in October last year, ‘moim’ is a metaverse platform specialized for MICE (Meeting, Incentive, Convention, Exhibition) and is currently in operation. In January, the platform was supplied to the National Marine Biodiversity Institute, and in March, the March 1st Movement commemorative event was held on moim.

An Eightone official stated, “Three B2C items including VR New York Story underperformed last year,” adding, “This year, we will focus on our core business and the metaverse platform ‘moim’ to recover to at least the 2020 performance level.”

Meanwhile, Eightone is a company engaged mainly in developing and servicing defense education and training solutions, including comprehensive logistics support projects for virtual training systems in the defense industry. Recently, it has expanded into the civilian sector, developing experiential VR simulations for safety and public sectors and AI engine platforms.