‘Bureung’ Mesh Korea, Ultimately Up for Sale

[Asia Economy Reporter Kwangho Lee] Mesh Korea, the operator of the delivery agency platform ‘Vroong,’ has taken the sale card after failing to overcome its crisis.

According to the investment banking (IB) industry on the 6th, Mesh Korea recently selected Samjong KPMG as an advisory firm for the management rights sale. The company plans to proceed through the issuance of redeemable convertible preferred stocks (RCPS) or convertible bonds (CB). Major shareholders of Mesh Korea include Naver, GS Retail, and Hyundai Motor Company. The main creditor is OK Capital.

Earlier this year, Mesh Korea received a loan of 36 billion KRW from OK Financial Group, secured by the major shareholder’s shares. The maturity date is November 15. With this investment attraction, the company plans to repay the existing OK Capital stock-secured loan.

As of the end of last year, Naver holds an 18.48% stake in Mesh Korea, making it the largest shareholder. Following are GS Retail (18.46%), CEO Yujeongbeom of Mesh Korea (14.82%), Hyundai Motor Company (8.88%), and Solbon Investment (7.51%).

Since last year, Mesh Korea has been pursuing fundraising worth several hundred billion KRW with a valuation of about 1 trillion KRW. Although it lowered the desired corporate valuation from 1 trillion KRW to 800 billion KRW, even this was difficult to be recognized by the market. KT, which had been conducting due diligence, ultimately decided not to invest, increasing uncertainty about the loan situation.

Separately from the sale process, existing shareholders plan to provide emergency funds within this month to resolve liquidity issues. Discussions are underway at the level of 10 to 15 billion KRW. Mesh Korea is also conducting high-intensity workforce restructuring to improve profitability. The company is accepting voluntary retirement applications from all employees and plans to expand business restructuring.

At the end of this month, Mesh Korea completely withdrew from its major deficit businesses, including dawn delivery and food ingredient businesses. Instead, it plans to significantly strengthen its profitable real-time motorcycle delivery business. Mesh Korea recorded an operating loss of 36.5 billion KRW last year, increasing its deficit by about 20 billion KRW compared to 17.8 billion KRW the previous year. The accumulated deficit has exceeded 110 billion KRW.

Mesh Korea is a delivery agency platform founded in 2013 by CEO Yujeongbeom. It provides B2B services delivering goods to companies or stores using motorcycles and trucks.