Failure to enter the game industry Woori Holdings increased its capital by 700 million yuan and resumed its old Spandex business

On May 6 last year, Woori Holdings planned to invest in the entire equity of Zhongqing Longtu at a price of 9.6 billion yuan, realize a backdoor listing, and transform into a game company. Subsequent company reorganization dreams were shattered, game products suffered infringement incidents, and operating results continued to decline. What's the next step? Woori Holdings decided to invest 700 million yuan to resume its old business and focus on its main business of Spandex.

When the reorganization of a listed company comes to naught and its operating results continue to decline, what should we do next? Woori Holdings gave its own answer. The listed company will invest 700 million yuan to resume its old business and focus on its main business of Spandex.

On May 6 last year, Woori Holdings planned to invest in the entire equity of Zhongqing Longtu at a price of 9.6 billion yuan. After the transaction is completed, Zhongqing Longtu will achieve a backdoor listing and Woori Holdings will transform into a game company. Immediately afterwards in August of the same year, Woori Holdings changed its plan and lowered the transaction price to 7.7 billion yuan.

The 2015 annual report shows that the company received more than 280 calls from investors during the reporting period, all of which were consulting on the company's asset restructuring progress. In the secondary market, as soon as the above-mentioned backdoor restructuring plan was released, Woori Holdings was swarmed by market hot money. After its share price resumed trading, it achieved 17 consecutive daily limits, setting a record high for the company's share price (35.66 yuan/share).

However, shortly after the plan was announced, Weir Group, the operator of Dota 2, and Blizzard Entertainment, the game company, successively sued Zhongqing Longtu and Lilith Technology to the court on the grounds of infringement of copyright, trademark rights and unfair competition, claiming compensation of 31 million yuan. Data show that in March and September 2015, the mobile game "Legend of the Knife Tower" brought more than 90% of Zhongqing Longtu's operating income, and the game "Legend of the Knife Tower" that was later sued was removed from Apple.

On November 30, 2015, Woori Holdings issued an announcement to terminate the material asset reorganization and withdraw relevant application documents. As of the close on the afternoon of May 3, 2016, the company's share price closed at 12.72 yuan/share, which was about 70% lower than last year's peak.

Woori Holdings has long been engaged in Spandex production and sales and real estate development business, but its operating results have not been satisfactory in recent years. From 2014 to 2015, Woori Holdings achieved net profits of 163 million yuan and 26 million yuan respectively, down 58.8% and 83.9% year-on-year. The newly disclosed first quarterly report for 2016 shows that Woori Holdings achieved revenue of 153 million yuan and a net profit loss of 25.19 million yuan.

According to the 2015 annual report, Woori Holdings 'real estate and Spandex businesses have shown a significant downward trend in the past two years. Among them, in terms of real estate, as the development of the Shudu Center project comes to an end, follow-up projects are still unclear, making it difficult to contribute to the company's performance in 2016; in 2015, Woori Holdings 'Spandex business revenue was 750 million yuan, accounting for 69.81% of the company's total revenue. However, due to the impact of the domestic macroeconomic environment, downstream demand continues to be sluggish, and prices are in a downward consolidation state. The Spandex business contributed a profit loss of 25.89 million yuan to listed companies in 2015.

However, after the restructuring suffered a setback, Woori Holdings still plans to focus its work on its traditional main business. At the development strategy level, Woori Holdings stated that in 2016, the company will adhere to the new materials and new technology industry as the leading industry and focus on the main business of Spandex; on the premise of controlling risks, increase the development of real estate projects; and Look for opportunities to enter emerging industries and cultivate new profit growth points.

On April 28, Woori Holdings issued a major investment announcement, planning to use its own funds of 700 million yuan to increase capital in the company's wholly-owned subsidiaries Jiangyin Woori Spandex Technology Co., Ltd. and Jiangyin Woori Investment Management Co., Ltd. Data shows that these two subsidiaries are mainly engaged in the research, development, production and sales of high-tech functional differentiated Spandex and warp-knitted Spandex, as well as self-operating and agent the import and export business of various commodities and technologies.

Woori Holdings told reporters that increasing the capital of Spandex's main business will help increase the capital scale of subsidiaries and enhance competitiveness, which is in line with the company's strategic planning and long-term interests.

At present, the domestic polyurethane differentiation rate is less than 30%, while the polyurethane differentiation rate in technologically developed countries is higher than 50%. Actively developing high-absorbent and moisture-releasing Spandex and high-performance functional differentiated Spandex, and actively developing high-end, fashionable and personalized Spandex fabrics is an inevitable choice, and it is also a means for enterprises to maintain strong competitiveness.

At the same time, the company stated in its 2016 annual report business plan that it would reserve follow-up real estate projects and start new project development as soon as possible.

Editor: vian