The Jeju Beer Company, well-known for its craft beer, will issue a large-scale convertible bond (CB) just three months after issuing 10 billion won in private loans.

Despite consecutive losses, investors are scratching their heads over the Jeju Beer Company's acquisition of a venture capital firm. Furthermore, with the recent issuance of another 10 billion won in CBs, questions have arisen about the purpose of the funding and its reliability.

Jeju Beer Company.

◇ The main business is sluggish… abrupt acquisition of venture capital firm KIB Ventures

According to reports from ChosunBiz on the 28th, the Jeju Beer Company raised 10 billion won through a convertible bond with warrant in January, and used those funds to acquire a venture capital company called KIB Ventures on the 8th of this month. The issue is that the original purpose of this funding was for 'operating funds.'

While it was initially stated that the funds would be used for operating purposes, it was later revised through an amended disclosure to 'acquire securities of another corporation,' effectively changing its intended use to mergers and acquisitions. This indicates that, despite ongoing losses, the company is investing in new ventures rather than strengthening its core business.

The target of the acquisition, KIB Ventures, is a company that invests in startups, which is different in nature from the manufacturing-based Jeju Beer Company. The amount of capital invested in the acquisition is approximately 31.7% of Jeju Beer Company’s assets and 126.5% of its equity, indicating a significant scale.

Graphic by Jeong Seo-hee.

◇ This time again issuing CBs… under the guise of 'operating funds'

On the 24th, the Jeju Beer Company announced that it will issue 10 billion won worth of CBs again. The company explained that, once again, the purpose of the funds is for 'operating funds.'

However, due to previous incidents, investors' suspicions are deepening. The current CB has been set at an interest rate of 1% with a conversion price of 2,260 won. Upon conversion, 22% of the total shares will be newly issued, which may lead to concerns over equity dilution.

Notably, the conditions in this announcement have changed in favor of investors. The interest rate increased from the previous 0% to 1%, and the conversion price decreased, resulting in a larger number of shares actually being issued. This indicates that the Jeju Beer Company is feeling urgent about securing funds.

A business school professor noted, 'It seems that the initial issuance was unattractive to investors due to high risks associated with corporate bonds, leading to poor sales of bonds. It appears that the company amended the terms to be more favorable to investors in order to secure funding quickly.'

◇ After acquiring HanWool Semiconductor, shareholder anxiety expands… 'I don’t know where the funds will be used'

Since its establishment in 2015, the Jeju Beer Company has never recorded a profit. After going public in 2021 through a technology exception, it has incurred losses for three consecutive years. In 2024, revenue was 18.2 billion won, down from the previous year, with cumulative operating losses reaching approximately 26.8 billion won. While the core craft beer business remains stagnant, financial activities such as bond issuance and mergers and acquisitions have become more active.

The background for this sudden directional change lies in the change of majority shareholder. The Jeju Beer Company's largest shareholder has changed hands twice. In November last year, it shifted from the previous 'Double H M' to the electronic parts company 'HanWool Semiconductor,' which holds 24.2% of Jeju Beer Company's equity.

Afterward, HanWool Semiconductor acquired a BW and injected funds into the Jeju Beer Company, which were then used for the acquisition of KIB Ventures. The Jeju Beer Company stated it was for 'securing new growth engines,' but market concerns have arisen that 'the identity of the beer company is being shaken.'

Given the precedent of issuing bonds under the guise of operating funds while actually purchasing a venture company, investors are worried that the funds from this CB may also be used for purposes other than originally intended. Despite repeated inquiries from reporters, the Jeju Beer Company has not clarified its stance.