Qoo10 CEO pledges $58 million in personal assets to compensate Korean merchants hit by cash flow crisis

The founder and CEO of Singaporean marketplace Qoo10 has pledged to use his personal assets to secure about US$58 million (KRW 80 billion) to compensate South Korean customers and suppliers affected by his company’s cash flow crisis, which in turn led to the failure of payments to about 60,000 small merchants who sell through the marketplace’s Korean subsidiaries Qoo10, TMON and WeMakePrice.

During an emergency hearing held by the South Korean government to discuss Qoo10’s liquidity crisis, Young-bae Ku, the company’s founder, said he would secure the amount within the next 30 days. He holds a 42.77% stake in Qoo10, while private equity firms including KKR hold a 25.65% stake in the Singaporean e-commerce platform.

“I will sell all my shares in Qoo10 or use them as collateral to deal with this situation,” Ku said.

The hearing came a day after TMON, once valued at $1.4 billion, and WeMakePrice filed for bankruptcy protection after failing to pay vendors this month.

Qoo10 will secure emergency liquidity from overseas funds, sell its subsidiaries or use them as cash collateral, the company said in a statement Monday. Qoo10 has told Korean financial authorities that it plans to raise $50 million in August, but the company has not yet provided details, according to the country’s Financial Services Commission.

The Seoul Bankruptcy Court said this week that TMON and WeMakePrice were unable to recover on their own and that it would review their applications and decide whether to begin the rehabilitation process. The review process typically takes a week to a month, according to Korean media.

The government intervenes

South Korea’s Ministry of Economy and Finance said Monday it will provide $400 million (KRW 560 billion) in financial support to suppliers affected by payment delays at TMON and WeMakePrice. In addition, South Korean financial authorities announced plans to offer low-interest loans to affected merchants, along with options to extend repayments on current loans and taxes.

According to the ministry, the unpaid bills of these entrepreneurs have increased to about $151 million (KRW 210 billion), up from $123 million last week. However, there are concerns that the amount of the bills could increase to $722 million (KRW 1 trillion).

Qoo10 has been expanding through a series of acquisitions over the past few years as it seeks to bolster its market presence and prepare its logistics unit Qexpress for an initial public offering on the Nasdaq in the U.S. In addition to acquiring WeMakePrice in April 2023 and TMON in August 2022, Qoo10 acquired Korean online shopping platform InterPark Commerce (not the same as InterPark Triple) in March 2023, as well as Hong Kong-based Korchina Logistics through its logistics unit Qxpress. Earlier this year, Qoo10 acquired Wish, a U.S. e-commerce platform, and AK Mall, an e-commerce company in South Korea.

However, these acquisitions also brought with them financial burdens and operational challenges, leading to the current liquidity crisis.

Founded in 2010, Qoo10 is a Singapore-based joint venture between American e-commerce company eBay and Gmarket founder Young Bae Ku, a South Korean e-commerce tycoon.

https://techcrunch.com/2017/04/26/ticket-monster-raises-115m-dolars