Investors of The Nature Holdings mull whether to withdraw money LPs have to make decision after outfit maker pulls out of TaylorMade deal

Translated by Kim So-in 공개 2021-07-30 08:09:58

이 기사는 2021년 07월 30일 08:07 더벨 유료페이지에 표출된 기사입니다.

Kiwoom Meritz Trend New Technology Fund 1, a new technology fund which invested in The Nature Holdings’ convertible bonds (CBs), is mulling over whether to continue its investment after the Korean clothing company decided to walk away from the acquisition of TaylorMade.

The private fund initially made the investment, hoping The Nature Holdings to join the acquisition of global golf equipment maker. While the company pulled out of the deal, general partners (GPs) of the fund expressed their intention to continue the investment to the issuer.

However, views are divided among limited partners (LPs). Some LPs want to continue investing in the fund while others want to withdraw their money. The conflict among LPs has put The Nature Holdings in an awkward position as it is willing to repay the debt if they request to do so.

The Nature Holding is in talks with the fund whether to repay CBs worth 50 billion won ($44 million) issued on July 9, industry sources said Wednesday.

The Nature Holdings issued the bonds to participate as a strategic investor in a deal to acquire TaylorMade. But the company later decided to pull out of the deal as the golf equipment company's buyer teamed up with another strategic investor.

LPs that invested in the fund will have to decide whether to withdraw their money or keep their investments.

Some LPs said they should withdraw their invested capital. “It is an issue where views may be divided among LPs because the deal itself, which was the purpose of issuing CBs, was canceled,” said an industry source. “Even if (LPs) wish to keep their investments, there can be a concern about compliance issues due to a change in purpose.”

The Nature Holdings has expressed that it will comply with any requests for reimbursement from LPs because it now needs less money after the cancellation of the deal. The company has sufficient money to expand its business in China. It can also avoid a risk that CBs can remain in debt in case they are not converted into stocks.

“Our position is that LPs have to choose either keeping the investment as it is or withdrawing the entire amount,” said an official at The Nature Holdings. “We have informed GPs that we will pay the full amount in case LPs ask for reimbursement.”

But some LPs reportedly want to continue betting on a rise in The Nature Holdings’ future stock price given its growth trend. The conversion price of the bonds was initially set at 71,067 won. Investors can exercise their conversion rights from July 9, 2022, which is two years after the issuance, to June 9, 2025, one month before the maturity.

Depending on the stock price, the conversion price can be refixed up to 60% of the initial conversion price, which means investors can convert their bonds at a low 40,000 won range or higher. The Nature Holdings’ stock closed at 67,600 won on Tuesday.

In order for the fund to maintain its investment, it requires the consent of all 17 LPs. GPs have started to gather opinions from LPs. An official at Meritz Securities said it is likely to come to a conclusion in the near future. (Reporting by Hyo-beom Lee)
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