First Statement After the 'Timeff Incident'
"Resolution Through Stake Sale and Other Measures"
Gu Young-bae, CEO of Qoo10, announced on the 29th that he would inject overseas funds held by Qoo10 and provide liquidity to TMON and WEMAKEPRICE by selling or using his entire Qoo10 stake as collateral. However, it remains uncertain how much this will help resolve the unsettled payments of the two companies.
The overseas fund injection revealed by CEO Gu on the day appears to refer to Qoo10's plan, already presented to financial authorities, to raise $50 million (approximately 70 billion KRW) next month through its overseas affiliate Wish. However, unsettled payments for May alone amount to 170 billion KRW, making this amount grossly insufficient to resolve the situation. Wish’s financial structure is also weak, and it is unclear how it will raise funds.
Wish is a North American and European-based e-commerce platform that Qoo10 acquired in February for 230 billion KRW. There have been suspicions that Qoo10 used the sales proceeds from TMON and WEMAKEPRICE as acquisition funds at that time.
Even if Qoo10 raises 70 billion KRW through Wish as planned, it will be impossible to fully settle the sales proceeds for sellers on TMON and WEMAKEPRICE. According to financial authorities, as of the 22nd, unsettled amounts are about 56.5 billion KRW for 195 companies on WEMAKEPRICE and about 109.7 billion KRW for 750 companies on TMON. This only accounts for unsettled payments from May, and the scale could increase exponentially when unsettled amounts from June and July are added.
In his statement, CEO Gu said, "The customer damage estimated by TMON and WEMAKEPRICE is around 50 billion KRW, mainly related to travel products," suggesting that if 70 billion KRW is brought in from Wish, consumer damages rather than seller damages could be addressed first.
The scale of unsettled payments to sellers is estimated to be in the trillions of KRW but has not been accurately tallied. CEO Gu also admitted in his statement that "it is difficult to accurately estimate the scale of seller damages." Several scenarios for securing overseas funds through routes other than Wish have been proposed to prevent a wave of seller bankruptcies, but all remain uncertain.
First, there is talk of "600 billion KRW support from Chinese funds." Kwon Do-wan, head of TMON’s operations division, explained that they are trying to lend to victims using 60 billion KRW of company funds in China as collateral. On the 25th, Ryu Hwa-hyun, co-CEO of WEMAKEPRICE, said, "I understand that Qoo10 is considering borrowing through collateral." However, this method lacks credibility, as it is not even confirmed whether 60 billion KRW is currently available in China.
CEO Gu stated he would use his personal assets, but this also seems difficult. During the acquisition process of WEMAKEPRICE and TMON through share exchanges, Qoo10’s stake has already dropped to around 50%. If he sells or pledges Qoo10 and Qxpress shares in this situation, his management rights would be shaken. However, CEO Gu clearly expressed his intention to maintain Qoo10’s management rights in his statement, saying, "Once the situation is resolved, Qoo10 will adjust its business structure and pursue management innovation."
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