Qxpress to split from cash-strapped Qoo10

Singapore-based logistics company Qxpress is set to separate from its financially troubled parent, Qoo10 Group.

According to the local investment industry Tuesday, private equity firms that have invested in Qxpress are reportedly gearing up to convert their holdings of exchangeable bonds and convertible bonds into common stock on a large scale, initiating the procedure to take over management control of the logistics subsidiary from Qoo10 to restore normal operations.

Investments totaling approximately 170 billion won ($127.6 million) have been made in Qxpress by several financial investors, including Crescendo Equity Partners, Metistone Equity Partners and Corstone Asia.

According to industry estimates, Crescendo, the largest investor with approximately 60 billion won in preferred convertible bonds, could see its stake in Qxpress rise to 34.2 percent if it converts its bonds to common stocks. With all the financial investors taking action, their combined ownership will potentially exceed 50 percent.

Currently, Qoo10 holds a 66 percent stake in Qxpress, while CEO Ku Young-bae owns 29 percent of the subsidiary and has a 38 percent stake in Qoo10. The bond conversions would dilute Ku's stake, turning him into a minority shareholder.

The plan comes as the investors believe Qxpress could thrive independently of Qoo10, which is facing significant financial and legal difficulties.

Qoo10 and CEO Ku are under investigation in Korea for alleged embezzlement, fraud and breach of trust, resulting in significant payment delays for vendors linked to its e-commerce platforms Tmon and WeMakePrice. Financial authorities estimate that unpaid bills from these struggling online marketplaces could total around 1 trillion won.

Tmon and WeMakePrice started court-led debt restructuring earlier this month and are now negotiating with vendors through the Autonomous Restructuring Support (ARS) program, with official court receivership pending. Interpark Commerce, another Qoo10-owned market, also filed for court receivership last week.

If the financial investors gain control of Qxpress, Ku's plans to address overdue settlements using Qoo10's capital and his own stake may be hindered.

Reports indicate the investors plan to complete the bond conversions by the end of the month and seek sales to a new strategic investor, fully separating Qxpress from Qoo10 and Ku.

After the settlement delays surfaced last month, Qxpress instantly distanced itself by stating that logistics from Qoo10's subsidiary markets represent only 10 percent of its total cross-border logistics volume. Ku also resigned as Qxpress CEO, with former CFO Mark Lee taking over the role.

Founded in 2011, Qxpress has most of its operations taking place in Southeast Asia, Japan and Korea.

Qxpress’ Nasdaq ambitions appear to have fizzled, as the company’s board recently decided officially to halt the process, according to local reports.

Industry observers have attributed the payment delays to Ku's aggressive expansion of Qoo10 through unreasonable mergers and acquisitions, which were intended to bolster the logistics company's debut on the US stock market. When Qoo10 acquired Tmon in 2022 and WeMakePrice in 2023, both companies were already heavily indebted.

Currently, Qxpress is working to normalize operations by selling domestic logistics assets and restructuring its workforce. The company is also negotiating payment solutions with logistics providers affected by the parent group's unresolved financial issues.

The potential independence of Qxpress is likely to accelerate the dissolution of Qoo10, with the group's three major Korean e-commerce units actively seeking new owners alongside their debt restructuring efforts.