Kim Jung-joo, chairman of Nexon's holding company NXC, tried to sell Nexon last year but failed. Nexon then had a difficult year because Nexon's big games failed or stopped developing.
In the midst of this, Nexon Korea borrowed 1.114 trillion won (some $0.9 billion) from its subsidiary Neople, the company said on April 27 in a public notice. Neople, which Nexon Korea borrowed, is the company that developed the mega-hit "Dungeon & Fighter."
Its borrowing period is from April 20, 2020 to April 19, 2021, with an interest rate of 4.6 percent. As a result, Nexon Korea's accumulated borrowing from Neople expanded to 1.696 trillion won ($1.4 billion).
Industry sources expect Nexon Korea's cashable assets to reach 2.2 trillion won ($1.8 billion) with the latest borrowing measures. At the end of last year, Nexon Korea held 711.2 billion won ($583 million) in cash and cashable assets.
Neople is a key affiliate of Nexon Korea, and Nexon Korea has been raising funds from its subsidiary Neople since last year.
In September last year, it borrowed 400 billion won in short-term loans and sold Nexon USA shares to Neople for 283.3 billion won. Nexon Korea also borrowed 382 billion won from Neople on April 8.
Nexon incorporated Swedish game development company Embarks Studio as a subsidiary in September last year. The move is aimed at spurring its efforts to tap into North American and European markets.
In September last year, Nexon Korea also made a strategic investment in Wonder Holdings, which owns e-commerce platform WeMakePrice, and secured a stake. As Nexon Korea borrowed 400 billion won from Neople, it was interpreted that Neople made strategic investments in Nexon and Nexon Korea.
Nexon Korea said in the regulatory filing that it will use the borrowed funds as operating funds and investment funds. Although it has not revealed a detailed fund management plan, the possibility of a large-scale M&A cannot be ruled out as the size of the borrowing is large.
An industry official said, "Nexon has completed internal maintenance by making a reorganization in the second half of last year and aligning various projects that have been lacking in results. Nexon is expected to actively expand its size by acquiring other companies in the future."
Meanwhile, "Dungeon & Fighter," developed by Neople, is becoming a revenue generator for Nexon. Based on the popularity of "Dungeon & Fighter" in the Chinese market, Neople posted 1.3056 trillion won in sales and 1.215 trillion won in operating profit in 2018.
According to a market research firm, Dungeon & Fighter was found to be the world's highest-grossing PC game in March. In addition, Nexon's "Dungeon & Fighter Mobile," which is holding a pre-booking event in China, has also seen signs of mega-hit with more than 32 million reservations.
