This article was published on Dec. 17, 2024, at 10:49 a.m. on the Chosun Biz Money Move (MM) website.
In July 2021, Maxst, an extended reality (XR) tech corporation, which was listed on the KOSDAQ market, is pushing for the sale of its controlling equity. Maxst, which made a glamorous debut recording the highest competition rate for domestic public offerings, has been wandering without finding a way out three years later. The corporation attempted to expand through mergers and acquisitions (M&A) but continued to receive poor report cards, causing its market capitalization, which was over 800 billion won in November 2021, to plummet to around 40 billion won the day before.
According to the investment banking (IB) industry on the 17th, Maxst has started the process of selling its controlling equity by distributing teaser letters to potential buyers. The subject of the sale is 4 million shares (13.2%) of Maxst held by the largest shareholder, Bahk Jae-wan, the CEO. It is known that negotiations for the sale with a domestic IT mid-sized corporation recently fell through.
Bahk's side has excluded Nine Games, a subsidiary acquired by Maxst earlier this year, from the sale. Bahk directly acquired Nine Games for 6 billion won, and Maxst plans to use this payment for repaying corporate bonds. Using funds raised through a capital increase, Maxst is repaying part of the first series of convertible bonds (CB), with the remaining amount being around 4.2 billion won.
Maxst gained industry attention in 2016 when it supplied augmented reality (AR) manual solutions to Hyundai Motor's Genesis. At that time, Hyundai Motor and Mando participated as strategic investors (SI) in Maxst's Series A and B rounds, and domestic venture capital (VC) firms like L&S Venture Capital, Intervest, Partners Investment, and YG Investment joined as financial investors (FI).
Subsequently, Maxst made a glamorous debut on the KOSDAQ market, recording the highest competition rate for public offering in 2021. On the first day of listing, July 27, the market capitalization based on the closing price (39,000 won) reached over 330 billion won and hit 700 billion won in August that year before surpassing 800 billion won on November 17 (92,900 won). This represents an increase of nearly 520% compared to the offering price (15,000 won).
However, a crisis has hit Maxst, which was once on the path of success. The global mobility restriction policies during the COVID-19 pandemic led to the expansion of the XR market, but after the end of the pandemic, demand decreased, plunging into a recession. The speed of XR diffusion slowed down more than expected and results started to decline, leading to a downward trend in stock prices starting in 2022.
Performance has also steadily declined. In consolidation, Maxst's revenue in 2022 was 2.9 billion won, and its operating loss was 10.8 billion won. Last year, it recorded a revenue of 1.8 billion won and an operating loss of 16.5 billion won, continuing to face deficits. By the end of the third quarter this year, the cumulative operating loss had reached 14 billion won. When Maxst went public, it expected an operating profit of 4.6 billion won in 2022 and projected an operating profit of about 9 billion won for the following year.
With both stock prices and performance plummeting, the financial structure is heading towards its worst. Recently, a paid-in capital increase was planned to raise 25 billion won but was reduced to 16.7 billion won due to the drop in stock prices. The funds raised this time were used to repay the first series of convertible bonds (CB). However, due to the significant reduction in the amount raised, there is a shortage of funds to be invested in operating capital.
Independent research firm ValueFinder noted, "With the current scale of the capital increase, we can only repay the put option for the convertible bonds, and we cannot cover employee expenses or other current expenses," adding that "the potential for additional fundraising through convertible bond issuance or paid-in capital increase cannot be ruled out, which could pose a negative risk factor for stock prices." As of the third quarter this year, Maxst's cash assets amount to approximately 7.8 billion won, while the salary expenditure for the first half of the year alone reached 8.9 billion won. Chosun Biz attempted to reach Maxst for an official response regarding the planned sale but could not make contact.