[Funding] E-Land World Secures 20 Billion Won Liquidity Using 'Trademark and License' as Collateral

[Asia Economy Reporter Lim Jeong-su] E-Land World has secured 20 billion KRW in funding by using trademark rights and license fees (including commissions) receivable from eight domestic and overseas affiliates as collateral. Previously, amid deteriorating credit ratings, the company increased market borrowings by issuing 100 billion KRW worth of public bonds (ESG bonds) with support from the Korea Development Bank. This is interpreted as a response to increased cash needs due to worsened cash flow from COVID-19 and investments in Magok, Seoul, and China.

According to the investment banking (IB) industry on the 24th, E-Land World, the holding company of the E-Land Group, recently received a 20 billion KRW asset-backed loan (ABL) underwritten by Yuanta Securities. The loan has a two-year maturity with repayment in installments every six months.

E-Land World provided trademark rights and license fees receivable from a total of eight affiliates?five domestic and three Chinese corporations?as repayment sources for the loan. The company transferred the rights to receive trademark and license fees to a special purpose company (SPC), which collects these fees from E-Land affiliates and repays the principal and interest accordingly.

E-Land World agreed to replenish funds to the SPC if events causing loss of benefit of term occur, such as a downgrade of its credit rating below BBB- or A3-. Currently, its credit rating is evaluated at BBB0 (negative outlook).

The use of trademark rights and license fees for financing by E-Land World is seen as a measure to meet increased funding needs due to deteriorating creditworthiness amid COVID-19, domestic and overseas investments, and affiliate support. Besides this ABL, external market borrowings are on the rise. As of the end of the third quarter, out of total borrowings of approximately 1.12 trillion KRW on a separate basis, about 520 billion KRW are short-term borrowings, posing significant short-term repayment burdens.

Earlier, E-Land World issued 100 billion KRW worth of two-year maturity public corporate bonds at 5.50% underwritten by KB Securities. The Korea Development Bank purchased most of the issuance, about 80 billion KRW. Most of the raised funds will be invested in the construction of the Magok E-Land Global Research and Development (R&D) Center.

An IB industry official commented, "With expanded funding needs due to investments such as the Magok R&D Center, external financing is increasing. Although performance has been recovering this year, financial improvement is still necessary."

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