This year, Megabox appears to have received 12 cash infusions from its holding company and affiliates, totaling 268 billion won. Critics say holding company Contentree JoongAng is shouldering the burden to support subsidiaries with weak finances.
According to the Financial Supervisory Service on the 24th, Megabox received 29.2 billion won in support from its holding company Contentree JoongAng on the 1st of 4th. The structure involves issuing electronic short-term bonds and repaying the money a year later. A week later, on the 7th, it borrowed 43 billion won from JoongAng Group's holding company JoongAng Holdings, and on the 14th, Contentree JoongAng again supported funds by purchasing 7.2 billion won of Megabox electronic short-term bonds.
In this way, the total amount of support Megabox received this year over 12 occasions is 268 billion won. By company, JoongAng Holdings provided 126 billion won, and Contentree JoongAng provided 142 billion won.
A liquidity crunch is behind Megabox's continued fundraising. The company said it would use the funds raised for operating capital and debt repayment. Megabox's current liabilities due by 2025 are 654.3 billion won. Of that, accounts payable are 103.1 billion won, and borrowing fund and bonds total 411.6 billion won.
By contrast, current assets that can be cashed within a year amount to only 190.8 billion won. Of that, cash and cash equivalents immediately available are 24.2 billion won, and short-term financial products are 6.6 billion won, bringing the assets that can be monetized in the short term to just 30.8 billion won. Simply put, the company has a total of 654.3 billion won due within a year, but has only 190.8 billion won available now.
If it is hard to repay debt with existing funds, it must generate cash, but its cash generation capacity is also weak. Megabox has posted losses for five consecutive years since 2020. In 2024, revenue edged up year over year to 353.3 billion won, but it still posted an operating loss of 12.7 billion won. After adjusting for non-cash expense (such as depreciation), operating cash flow was positive, but its core business revenue was in the red.
It is also hard to borrow in the market. That is because its debt ratio, a long-term soundness indicator, is nearing 856%. Generally, when the debt ratio exceeds 200%, financial soundness is considered problematic. As of the end of 2024, Megabox's total equity is 107.6 billion won and total liabilities are 922.1 billion won.
Kim Beom-jun, a professor in the accounting department at the Catholic University, said, "The debt ratio, a long-term soundness indicator, is nearing 900%, and current liabilities, a short-term financial indicator, are three times current assets, indicating a very poor financial condition," and noted, "It is not in a position to borrow funds from the market, so it is receiving support from affiliates."
The financial condition of holding company Contentree JoongAng is also weak. On a consolidation basis in the first half of this year, assets were 2.4805 trillion won, liabilities were 2.0162 trillion won, and equity was 464.3 billion won. The debt ratio was 419%, well above the 200% stability threshold.
Recently, it borrowed 17 billion won from subsidiary Phoenix Sports for operating capital. There is criticism that a holding company with poor financial safety is taking on the burden to help loss-making subsidiaries.
ChosunBiz made several attempts to contact Megabox for comment on its financial situation, but could not reach the company.