Fantagio Overcomes Critical Phase with Capital Increase, Profitability Improvement Is the Key

230 Billion Raised Through Rights Offering
Funds Planned for Drama and Album Production Costs
Profitability and Financial Structure Improvement Remain Challenges

Fantagio, a KOSDAQ-listed company, raised funds for drama and album production through a rights offering. Fantagio is preparing to produce the historical drama 'Uinyeo Daejanggeum' (working title), aiming for broadcast in the first half of next year. With a high dependence on revenue from the minority artist management business division, Fantagio is pursuing revenue diversification and profitability improvement through drama production.

According to the Financial Supervisory Service on the 23rd, Fantagio issued 112 million new shares to shareholders, raising 23 billion KRW. The scheduled listing date for the new shares is the 7th of next month. Although 7,315,270 unsubscribed shares occurred in the subscription for existing shareholders, the company completed investor recruitment through a general public offering from the 18th to the 19th.

The funds secured through the rights offering will be used to produce content, including dramas. Fantagio is an entertainment company engaged in artist management and drama production. As of the end of last year, the management revenue ratio was 51.1%. Among its affiliated artists, the top three, including Cha Eun-woo, accounted for 47% of the revenue.

Fantagio is striving to diversify the portfolio of its affiliated entertainers to reduce revenue dependence on specific artists. It introduced the multinational boy group LUN8 in June last year.

Starting drama production in 2021 is also part of revenue diversification. Following the broadcast of 'Blind' in the second half of 2022, approximately 12 billion KRW in drama production-related revenue was generated. This year, it is expected to recognize revenue by producing 'Fantasy Love Song' and 'Treat Me Badly.'

'Uinyeo Daejanggeum,' scheduled to air in the first half of next year, is one of the anticipated works. After casting actress Lee Young-ae as the lead last year, the company finalized the contract with the writer. 'Uinyeo Daejanggeum' will depict the life story of Jang-geum, who became a uinyeo (female medical officer), following the 2003 drama 'Daejanggeum.' Among the funds raised through the rights offering, 15.1 billion KRW will be invested in producing 'Uinyeo Daejanggeum.' The remaining funds will be used for album production costs and company operating expenses.

A company official said, "The production of dramas that will attract artistic quality and public attention will accelerate," adding, "We expect stable revenue as content production, including dramas with competitiveness in domestic and international markets, continues along with active activities of affiliated artists."

While successfully raising funds and promoting business diversification, the need to improve the financial structure is also increasing. As of the end of last year, the debt ratio was 81%. The total liabilities amount to approximately 32.1 billion KRW. The conversion price of the 13 billion KRW convertible bonds issued in November 2022 exceeds Fantagio's stock price. The company explained that since an affiliate holds the convertible bonds, the possibility of an early redemption request in the short term is low.

Fantagio, a company with a fiscal year ending in June, recorded sales of 31 billion KRW and an operating loss of 1.1 billion KRW in the first half from July 1 to December 31 of last year.