Netmarble sells stake in BTS label HYBE for $161 mn

South Korean game developer Netmarble Corp. is selling a stake in HYBE Co., the label behind global K-pop sensation BTS, for 219.9 billion won ($161 million) to repay debts in a block deal within a structure to gain even more if the entertainment powerhouse’s stock price rises further.

Netmarble said it is set to unload a 2.64% stake in HYBE, or 1.1 million ordinary shares at Thursday’s closing of 199,900 won apiece in a price return swap (PRS) deal. The transaction was scheduled for Friday before the South Korean stock market opened, according to the game developer’s regulatory filing.

The PRS deal is poised to allow Netmarble to collect differences from the buyer if HYBE’s shares rise above the sale price but to force the game publisher to compensate the counterparty’s losses if the stocks fall below the level. The buyer will get voting rights for HYBE and dividends, along with fees for the contract.

SHARE PRICES RALLY

Netmarble’s share prices advanced as much as 11.7% to 72,400 won, the highest since April 2023, on Friday morning, while HYBE’s stock prices gained up to 1.3% to 202,500 won. The benchmark KOSPI advanced as much as 1.2%.

Netmarble may have selected the structure, betting on a rebound in HYBE’s shares that have been under pressure from the mounting conflicts with its sub-label ADOR of popular girl group NewJeans, securities industry sources said.

The game developer plans to use the proceeds of the sale, which cut its stake in HYBE to 9.44%, to repay the existing debts. Its short-term debts topped 1.3 trillion won as of the end of 2023.

Netmarble last November sold a 6% stake in the label to raise 523.5 billion won.

Write to Seok-Cheol Choi at dolsoi@hankyung.com
 
Jongwoo Cheon edited this article.