HYBE CEO Lee Jae-sang Assures Financial Stability Amid NewJeans Controversy

As reported by Ten Asia on October 16, 2024, HYBE’s CEO Lee Jae-sang reassured employees about the company’s robust financial health during an internal town hall meeting. On October 14, he disclosed that HYBE’s cash reserves stand at 1.2 trillion KRW (approximately $890 million).

In light of ongoing disputes involving NewJeans and ADOR’s previous head, Min Hee-jin, Lee Jae-sang expressed confidence that the situation would eventually be resolved. Some online commentators suggested that HYBE was incurring losses due to the internal conflicts with NewJeans. In response, Lee stated,

“If we trust and wait, the issues will resolve themselves one by one. HYBE has 1.2 trillion KRW (approx. $890 million) in available cash assets, and our financial condition is very healthy.”(translated by Allkpop).

Industry analysts indicated that Lee Jae-sang’s comments were aimed at easing concerns regarding HYBE’s obligation to repay a convertible bond (CB) totaling 400 billion KRW (about $296 million). These remarks appear strategically designed to alleviate employee anxiety surrounding these financial challenges amid the current controversies.

HYBE’s CEO Lee Jae-sang affirms the issuance of 400 billion KRW in convertible bonds, showcasing strong financial health

To provide context, Lee Jae-sang stepped into the role of HYBE Corporations’ CEO on July 24, 2024, following the resignation of Park Ji-won. The report from Ten Asia on October 16 highlighted the CEO’s emphasis on the company’s “available cash assets,”which encompass cash, cash equivalents, and other short-term financial resources accessible to HYBE.

Currently, the company holds over 1.745 trillion KRW (around $1.278 billion) in liquid assets. This amount includes 753.1 billion KRW (roughly $551 million) classified as other current financial assets and 321.4 billion KRW (approximately $235 million) in cash and cash equivalents.

Despite the ongoing tensions between HYBE and former CEO Min Hee-jin of ADOR, which have persisted since April 2024, the company successfully launched the issuance of 400 billion KRW in convertible bonds in September 2024. On October 15, Lee Jae-sang announced that the premium rate for these convertible bonds was set at 20%, reflecting a 5% increase from the previous issuance.

An industry source shared with Ten Asia:

“Corporate CB repayments are generally fulfilled through the issuance of CB conversions. This successful issuance indicates that the market strongly recognizes HYBE’s growth potential and prospects for stock price appreciation. While there is considerable noise surrounding the company, its financial status remains promising.”

Financial analysts forecast that HYBE’s growth in profitability could exceed 151.2 billion KRW (about $110 million) in the last quarter of 2024. These projections are bolstered by the anticipated solo album release from BTS’s Jin in November 2024. Additionally, the other prominent K-pop group SEVENTEEN, a subsidiary of HYBE under Pledis Entertainment, saw substantial profits in October 2024.

SEVENTEEN’s latest mini album, SPILL THE FEELS, debuted on October 14, 2024, selling 2.49 million copies on its first day, further enhancing HYBE’s cash reserves.

Moreover, recent releases from Belift Lab’s ENHYPEN and KOZ Entertainment’s BOYNEXTDOOR have witnessed impressive album sales.

In other developments, on August 27, 2024, HYBE’s subsidiary ADOR terminated Min Hee-jin’s employment and appointed Kim Joo-young as the new CEO. Min Hee-jin has since filed for another injunction at the Seoul District Court, seeking an emergency shareholders’ meeting to reinstate herself as ADOR’s CEO. The final hearing for this injunction is scheduled for late October 2024.

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