Domestic online video service (OTT) corporations Watcha has completed the appointment of a chief restructuring officer (CRO) and is accelerating efforts to normalize management, including signing video content supply contracts. It also recently emerged that there were attempts, centered in the United States, to pursue mergers and acquisitions (M&A).
Based on ChosunBiz reporting on the 22nd, Watcha, which is undergoing rehabilitation proceedings, has completed appointing a CRO from the financial sector and is carrying out corporate restructuring. The CRO appointed this time has been active since 2020 and has experience handling about 10 rehabilitation cases. The Seoul Bankruptcy Court pre-assembles personnel so it can appoint a CRO as needed.
Watcha submitted an application for approval to appoint a CRO to the Seoul Bankruptcy Court in August. The CRO is an external figure who provides advice on the company's rehabilitation procedures and overall restructuring and supports the drafting of a self-rescue plan. The CRO also checks and supervises the company's financial situation and normalization plans and explains these to stakeholders, such as creditors.
Watcha is in a situation where Chief Executive Park Tae-hoon is continuing to manage the company as the administrator. The company pursued the appointment of a CRO to focus on existing management activities and improve the efficiency of the rehabilitation process. It is a measure to secure the trust of creditors and the court and to transparently manage the company's restructuring process.
Alongside corporate restructuring, Watcha is also speeding up efforts to normalize its business, including providing video services. Last month, it signed a video content supply contract with SLL, a content production company under JoongAng Group, and lent funds to its subsidiary W Services. W Services is a corporations specializing in customer support and service quality operations and management for Watcha users.
The lending of funds was carried out to maintain the payment network after the commencement of rehabilitation proceedings. Once the rehabilitation process began, the payment gateway company demanded a surety insurance policy from Watcha. A surety insurance policy is a mechanism the payment gateway requires from a business to guard against risks that may arise during the payment process.
However, as a rehabilitating corporations, Watcha could not obtain a surety insurance policy, so it issued the securities under the name of its subsidiary W Services and lent funds to designate it as the collateral provider. Through this step, Watcha maintained a structure in which operating funds for content services flow in.
Watcha is said to have attempted to pursue M&A with a U.S. corporations. To that end, Watcha CEO Park Tae-hoon reportedly made a business trip to the United States. A source said, "They are looking into M&A on the U.S. side, and Park is making efforts, but nothing has been finalized yet."
The source added, "Because funds became tighter than before entering rehabilitation proceedings, it became a problem when the payment gateway did not remit payments," and "with the issuance of a surety insurance policy through measures such as lending funds, the payments have also been deposited."
Watcha was founded in 2011, starting with a personalized movie recommendation service, and launched a streaming service in 2016. It attracted many users with strengths in movie ratings, but as competition in the OTT market intensified, it began to face difficulties in operating the business.
In 2021, it raised a 49 billion won convertible bond (CB) investment from major venture capital firms and individual investors, but it failed to repay principal and interest by the maturity that arrived in Nov. last year. Inlight Ventures, a Watcha creditor, filed a rehabilitation petition with the court, and in August the court decided to commence rehabilitation proceedings.