Private equity firm JKL Partners has begun to recover its investment in Contentree JoongAng, which it invested in four years ago.
According to the investment banking (IB) industry on the 2nd, JKL Partners decided to sell the ‘Contentree JoongAng Series 17 convertible bond (CB)’ holdings, which it acquired in May 2021, back to Contentree JoongAng.
At that time, JKL Partners established 'Juno 2021 Limited Liability Company' and fully acquired a convertible bond worth 100 billion won. The conversion price was set at 46,777 won, with a coupon rate and guaranteed yield of 0%.
The poor performance and declining stock price of Contentree JoongAng led to the decision to sell the convertible bonds. Although it gave up fixed income at the time of investment in expectation of capital gains from stock conversion, the stock price dropped.
The stock price of Contentree JoongAng, which was around 45,000 won at the time of issuance, has fallen by 80% to the current level of 9,000 won due to continued losses. This is lower than the re-fixing limit of 32,744 won.
JKL Partners is pursuing capital recovery that includes interest money rather than capital gains from the stock price rise. It received 20 billion won at the beginning of the year and agreed to receive guaranteed interest of 7.33% on the remaining 80 billion won.
Specifically, JKL Partners is expected to receive 53.2 billion won, including interest, by the end of this month and 55.2 billion won by the end of November. Once the recovery is completed, a total of 128.4 billion won will be collected.
Meanwhile, Contentree JoongAng recently secured an investment of 30 billion won from Korea Investment Private Equity (HanTuh PE). On the 15th of last month, HanTuh PE acquired a convertible bond of 30 billion won from Contentree JoongAng.