South Korean tech giant Naver has invested 40 billion won ($36 million) in Insung Data, operator of food delivery app Logiall, through convertible preference shares (CPS).

The sale of 903 shares is Insung Data’s first CPS issue. Naver also bought old shares owned by existing shareholders. Logiall is a wholly-owned subsidiary of Insung Data.

A notable feature of the deal is that the conversion price will be reduced to 70% of the initial conversion price when the number of new store openings by Logiall in a half-year period, divided by the number of closures, is less than 0.9, signifying that Naver won’t allow many outlets to be shut.

The conversion price will also be changed if the number of freelance motorcycle drivers used by Logiall decreases to less than 80% in a six-month period. This means Insung Data will have to prevent an outflow of drivers to maintain the conversion price.

If the company fails to meet the target for drivers, the original conversion price of 11,073,883 won will be lowered to 7,751,718 won. Naver will have 1290 shares after converting the initial 903 shares. A reduction in the conversion price would have a negative impact on the company’s equity value and enterprise value.

Industry insiders said it is unusual that Naver included specific operational terms in the contract for acquiring its CPS. Insung Data’s rivals, Mesh Korea and Barogo, issued their redeemable convertible preference shares based on general terms and conditions.

Observers said Naver decided to purchase a minority stake in Insung Data rather than acquiring management rights as managing delivery drivers involves labor risks. (Reporting by Byung-yoon Kim)

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