Big Hit Announces 440 Billion KRW Rights Offering to Shareholders for Itaca Acquisition and Operating Funds

Ithaca Holdings Acquisition Payment Schedule Moved Up
Repayment with Capital Increase Funds After Borrowing from Financial Institutions

[Asia Economy Reporter Hyungsoo Park] Big Hit has launched a rights offering just six months after going public in October last year.

On the 2nd, Big Hit announced that it will conduct a rights offering followed by a general public offering of unsubscribed shares, allocating 0.063 new shares per existing share. It will issue 2,227,848 new shares to raise 440 billion KRW. The funds raised will be used for debt repayment and operating expenses.

Big Hit has signed a merger agreement for its 100% US subsidiary, Big Hit America, to acquire 100% of the shares of Ithaca Holdings LLC, a comprehensive US-based media holding company covering music management, record labels, publishing, film, and TV shows.

The total payment for the share acquisition and repayment of the target company's debt amounts to approximately 1.05 billion USD (about 1.1889 trillion KRW). BH Odyssey Merger Sub LLC, a special purpose company established as a 100% subsidiary of Big Hit America on the 22nd of last month, will reverse merge with Ithaca Holdings, the acquisition target. Ithaca Holdings will remain as the surviving company and become a 100% subsidiary of Big Hit America, while Big Hit America will pay cash to Ithaca Holdings’ existing shareholders as merger consideration. The payment will be used to repay the target company’s debt.

At the initial closing, Big Hit America will directly acquire 80.8% of Ithaca Holdings’ shares. The remaining 19.2% will be acquired through CP VI Ithaca Holdings, a wholly owned subsidiary of Big Hit America. Subsequently, through restructuring procedures under US law, Big Hit America will hold 100% of Ithaca Holdings’ shares.

To acquire the shares, Big Hit will participate in a rights offering of Big Hit America worth 950 million USD by using its own funds and an additional 450 billion KRW in won-denominated borrowings. Separately, Big Hit America will provide a debt guarantee for a 100 million USD loan planned to be borrowed locally in the US.

The funds raised through the rights offering will be used to repay approximately 250 billion KRW of the new borrowings. Although Big Hit initially expected to make the acquisition payment in mid-June, the payment schedule was moved up to the 3rd of next month during acquisition negotiations. Consequently, Big Hit decided to raise 450 billion KRW through financial institution borrowings first. The structure involves borrowing 450 billion KRW initially, completing the rights offering, and then repaying 250 billion KRW.

On the 1st, Big Hit held a board meeting and decided on a physical division and absorption-type merger of its subsidiaries. After the physical division and merger, starting in the second half of this year, Big Hit plans to focus on the solution area that oversees and manages the entire company including subsidiaries and creates secondary and tertiary businesses based on HYBE Labels’ IP. Of the funds raised through the rights offering, 190 billion KRW will be used for producing performances and content for artists under its labels. From the second half of this year, Big Hit is preparing to resume offline concerts depending on the COVID-19 situation. It also plans to operate an artist museum on a regular basis at its new headquarters in Yongsan.

This content was produced with the assistance of AI translation services.