MegazoneCloud secures $396.2M in debt financing

The ₩600B is a loan secured by Megazone Cloud shares, not a loan to the cloud unit. It is part of a ₩800B package that Megazone, the parent, signed with Glenwood Credit. The other ₩200B is exchangeable bonds. Proceeds go toward buying out MBK Partners and IMM Private Equity, which put in ₩450B in 2022. Reports put the cloud unit's valuation in the deal at over ₩4T, about $2.6B.

The structure is meant to clear a possible overhang before an IPO. It raises Megazone's ownership of the cloud unit and removes a concern that had weighed on listing prospects. Megazone owns 72% of Megazone Cloud, and the Korean press has flagged repayment risk. The parent's current liabilities exceed its current assets by ₩234.1B, and auditors raised going-concern doubts.

For AI founders, this is a late-stage example of financing a cap table cleanup with asset-backed credit instead of new equity. Founders with large early investors who want exits may see more of this. The risk is that the borrower's debt service now depends on the subsidiary's share value and on the IPO happening.