Shinhan Venture Sells Additional Dreamus Shares, Secures 5 Billion KRW... Acquisition Financing Pressure Eased

2.11 Million Shares Sold Over-the-Counter, Remaining Stake at 7%
Liquidity Secured Ahead of Acquisition Financing Maturity
Financial Risk Considered Resolved

Shinhan Venture Investment, which had invested in Dreamus Company, the operator of the music platform 'FLO,' has sold its remaining shares and recovered an additional 5 billion KRW, bringing its total cumulative returns to over 30 billion KRW. This latest sale has secured the funds needed to repay the leveraged acquisition financing used for the Dreamus Company investment, effectively resolving the company’s financial risk.

According to the investment banking (IB) industry and the Financial Supervisory Service's electronic disclosure system on December 12, Neospace, a special purpose company (SPC) established by Shinhan Venture Investment for its Dreamus Company investment, sold 2.11 million shares (2.85%) of Dreamus Company in an over-the-counter transaction on December 5. The disposal price was 2,368 KRW per share, amounting to a total of 5 billion KRW. As a result, Shinhan Venture Investment’s stake in Dreamus Company fell from 9.91% to 7.06%.

With this additional 5 billion KRW recovery, the cumulative returns from the Dreamus Company investment have increased to just over 30 billion KRW. Shinhan Venture Investment, which invested a total of 70 billion KRW in Dreamus Company, recovered approximately 15 billion KRW (8.6% stake) on November 28 through the transfer of management rights to BeMyFriends alongside SK Square and SM, and had previously recouped some of its investment by partially selling shares after converting convertible preferred shares (CPS) into common stock.

This share sale is significant as it secured repayment funds ahead of the imminent maturity of the acquisition financing. Neospace utilized acquisition financing when investing in Dreamus Company in 2021. Although the loan terms were adjusted (refinanced) in June 2023, the maturity of the acquisition financing is approaching in mid-December. By securing cash through the additional share sale, the company is now able to fully repay the acquisition financing.

The market views this sale as resolving the financial risk associated with the maturity of the acquisition financing. An IB industry insider stated, "Concerns about large-scale share sales due to the maturity of the acquisition financing had a negative impact on Dreamus Company’s stock price. With this sale, worries over large-scale sales have eased for the time being, and we can expect price stabilization and even a potential increase."

Freed from the pressure of acquisition financing repayment, Shinhan Venture Investment is now expected to focus on recovering its remaining shares. Given BeMyFriends’ strong commitment to enhancing Dreamus Company’s value, the plan is to wait for a value increase and then gradually dispose of the remaining 7.06% stake, taking market conditions into account. The final return on the Dreamus Company investment will depend on the sale price of the remaining shares.