With one year left before the expiration of the 6-year fundraising project, why did Youzu Network decide to terminate it and use the remaining raised funds and interest of 627.5 million yuan to permanently replenish liquidity?
On July 1, a reporter from Dahe Finance Cube called Youzu Network as an investor, and the relevant staff responded: "Whether it is changes in the external market or changes in the shareholders of internal companies, it will affect the use of the overall raised investment funds." After the proposal to change the use of the raised funds is passed, the remaining funds will be used for the company's daily operations, including game research and development and operation. ”
On June 29, Youzu Network held the first bondholder meeting and the first extraordinary general meeting of shareholders in 2024, passed the "Proposal on Terminating the Fundraising Project and Permanently Replenishing the Liquidity of the Remaining Raised Funds", and issued relevant announcements on the resale of Youzu convertible bonds on July 1.
The general meeting of shareholders and the meeting of bondholders passed the proposal by a high vote
According to the announcement of Youzu Network on June 28, the company held the first bondholder meeting in 2024 and the first extraordinary general meeting of shareholders in 2024, and in the vote on the "Proposal on Terminating the Fund-raising Project and Permanently Replenishing the Liquidity of the Remaining Raised Funds", the former was approved with 77.34% of the votes, and the latter was also approved with a high proportion of 99.21% of the votes.
Founded in 1995 with a registered capital of 916 million yuan, Youzu Network is a global game company integrating research and operation, the company is based on global game research and development and distribution, adheres to the strategic direction of "global card +", and has launched self-developed card games represented by the "Youth" series "Youth of the Three Kingdoms" and "Youth Journey to the West".
On September 23, 2019, Youzu Network publicly issued 1,150 convertible corporate bonds (hereinafter referred to as "Youzu Convertible Bonds"), with a total issuance amount of 1.15 billion yuan and a maturity of 6 years. After deducting part of the underwriting and sponsorship fees, the actual raised funds received were 1.135 billion yuan.
According to the previous plan, of the total funds raised, 653 million yuan will be invested in the "online game development and operation construction project", 151 million yuan will be invested in the "online game operation platform upgrade and construction project", and the remaining about 345 million yuan will be used to supplement working capital.
There is still one year left before the expiration of the fund-raising project, on June 7 this year, Youzu Network issued the "Announcement on Terminating the Investment Project of Raised Funds and Permanently Replenishing Liquidity", as of May 31, 2024, the company has invested a total of 523 million yuan in the fund-raising project, and the funds originally invested in the above two main projects have not been used.
Youzu Network said that according to the actual business situation and future development plan, it is planned to terminate the "online game development and operation construction project" and the "online game operation platform upgrade construction project", and the remaining raised funds will total 627.5 million yuan, accounting for 55.53% of the net fundraising, for permanent replenishment of working capital.
Change the use of raised funds to optimize resource allocation
The reporter noted that in addition to the changes in the external game industry environment, in recent years, Youzu Network has also experienced changes in control and board of directors within the company.
In 2023, Youzu Network will carry out a comprehensive renovation from the board of directors, the front desk of research and operation to the back office, and take the initiative to "slim down", and adjust the organizational structure around the principles of "integration of research and operation" and "independent operation", and the total number of employees in the company will be 1,028 by the end of 2023, a year-on-year decrease of 34.90%.
Based on the above background, the company continued to focus on the development of its main business and adjusted its strategy, that is, from the "high-quality", "globalized" and "big IP" strategy to the "global card +" strategy, and actively embraced the AI technology change since 2023.
Regarding whether the change in the use of raised funds will affect the research and development of game projects, the relevant staff of Youzu Network responded to reporters: "We are a game company, and the remaining raised funds will be used for the company's daily operations, in fact, it is mainly game development and operation. ”
"At that time, many of the projects listed when raising investment funds were based on the market environment, industry trends and other factors at that time, and now due to a variety of reasons, such as changes in the external market environment and changes in the company's internal shareholders, this will affect the overall use of raised funds." The above-mentioned staff said that in view of the fact that the early planning failed to meet the current market development changes and the company's business development plan, the company re-examined the use of raised funds.
Youzu Network also said in the announcement that this is a prudent adjustment made by comprehensively considering the company's actual operating conditions and future development plans, which is conducive to improving the efficiency of the use of raised funds, optimizing resource allocation, and reducing the company's financial costs, which is in line with the company's long-term interests.
"Reducing costs and increasing efficiency through AI has become a common choice in the game industry." Zhang Shule, a game industry analyst, said in an interview with a reporter from Dahe Finance Cube that "Young Journey to the West", as a veteran IP of Youzu Network, still has a certain market appeal, but as the company continues to take the card route, the accumulation of follow-up combat power may become one of the problems.
Zhang Shule said that although game products are not necessarily large-scale productions, there must be iteration and innovation in the gameplay experience, and entering mini games may be an option for them to change their product development and operation strategies.
627.5 million yuan for permanent replenishment caused controversy
In response to the proposal to change the use of raised funds by Youzu Network, Pi Haizhou, a financial commentator, recently issued a document saying that according to the "Q&A on Issuance Supervision - Regulatory Requirements for Guiding and Regulating the Financing Behavior of Listed Companies" revised and issued by the China Securities Regulatory Commission in November 2018, the proportion of funds raised through other means to supplement liquidity and repay debts shall not exceed 30% of the total amount of funds raised.
Pi Haizhou said that Youzu Network will use the remaining raised funds and interest totaling about 627.5 million yuan to permanently replenish liquidity, exceeding the 30% limit. "This fund belongs to the investors of Youzu Network convertible bonds, and should be actively returned to investors."
Regarding this dispute, the above-mentioned staff said: "The reasons and plans for changing the use of raised funds are mentioned in the company's announcement. The change proposal has also passed the resolution of the creditors' meeting and the extraordinary general meeting of shareholders. ”
On July 1, Youzu Network issued the "First Indicative Announcement on the Repurchase of Youzu Convertible Bonds", and stated that according to the "Prospectus for the Public Issuance of Convertible Corporate Bonds by Youzu Network Co., Ltd.", the holders of "Youzu Convertible Bonds" can sell back part or all of the "Youzu Convertible Bonds" that have not been converted into shares.
It is worth mentioning that the holders of the "Youzu Convertible Bonds" have the right to choose whether to sell back, and this buyback is not mandatory. Among them, the resale price is 101.425 yuan / piece (including interest and tax), the resale declaration period is from July 8 to July 12, 2024, and the investor's resale money will be received on July 19. In addition, the relevant announcement also details the publicity period, declaration period, payment method and other contents of the resale matters.
As of today's close, the share price of Youzu Network edged up 0.79% to 7.65 yuan per share.
Editor-in-charge: Liu Anqi | Reviewer: Zhang Yipeng | Review: Li Zhen | Supervisor: Wan Junwei
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