[At a Crossroads: Listed Companies] Haitron, 'The Dream PE' Not Registered with FSC... Is It a Corporate Raider?②

[Asia Economy Reporter Jang Hyowon] It has been confirmed that the private equity fund (PEF) that acquired the largest shareholder stake in security equipment manufacturer Haitron Systems is a corporation not registered with the Financial Supervisory Service (FSS). Additionally, attention is focused on the fact that the new director candidates at this regular shareholders' meeting include individuals associated with delisted companies.

Unregistered PEF Acquires Haitron’s Largest Shareholder Stake

According to the FSS electronic disclosure on the 29th, ‘Dream High Private Equity Investment Limited Partnership (Dream High),’ which contracted to purchase 839,981 shares (12.51%) held by Haitron’s largest shareholder, President Choi Young-deok, at 10,000 KRW per share, is a management participation-type private equity fund (PEF) established under the Capital Markets Act.

Dream High’s general partner (GP) is ‘The Dream Private Equity (formerly Dream PE).’ This is a completely different company from Dream PE, which was founded by CEO Choi Jang-soon, a former vice president of Leading Investment Securities.

A PEF consists of a GP responsible for operation and management and liquidity providers (LPs) who invest capital. The GP must register the PEF with the FSS within two weeks of its establishment.

Since Dream High was established on the 8th, The Dream PE was required to register as the GP of the PEF with the FSS by the 22nd. However, as of the 23rd, it was confirmed that The Dream PE had not registered with the FSS.

An FSS official stated, “When a PEF is established, the GP must meet registration requirements such as capital size and management personnel and register with the FSS within two weeks. The Dream PE, which established Dream High, has not registered.”

Moreover, the registered addresses of Dream High and The Dream PE are unclear. Their registered address is ‘Room 4902, 40 Munhyeongeumyung-ro, Nam-gu, Busan.’ This address corresponds to the Busan International Finance Center (BIFC), but the entire 49th floor of BIFC is vacant.

A BIFC official said, “The 48th and 49th floors are designated evacuation areas and are kept empty. Also, BIFC houses financial institutions such as the Korea Exchange and the Korea Securities Depository, and no private companies are located there.”

Regarding this, Kim Myung-kwan, CEO of The Dream PE, said, “BIFC has buildings 1, 2, and 3, and the officetel unit 4902 is the address.” However, the location Kim mentioned was confirmed to be a completely different address. He did not respond to questions about The Dream PE’s failure to register with the FSS.

New Auditor Candidate Has Work History at Suspended Trading Company

In the market, the actual owner of The Dream PE is known to be Mr. Y. Mr. Y was previously CEO of Company G and was imprisoned for false capital contributions and embezzlement. Company G was eventually delisted. Mr. Y has also been associated with multiple delisted companies besides Company G.

The new board members to be appointed at this shareholders’ meeting also include individuals connected to delisted companies. According to the agenda, Haitron has nominated Kwon Hyuk-jin, CEO of Signity, as the new auditor candidate.

CEO Kwon served as an outside director of GW Vitec (formerly Aprontier), which is currently under trading suspension, from July 2019 to October last year. GW Vitec changed its largest shareholder to Jeju Star Tour in July 2019 and appointed Kwon and others as outside directors. However, within just eight months, the company received a disclaimer of opinion from auditors and entered a trading suspension status.

Additionally, the market reports that the real owner of corporations such as Alphatron, Debi (formerly CNK Daebu), and Signity, where CEO Kwon is involved, is loan shark Mr. K. Mr. K is known as a financier who funds numerous no-capital mergers and acquisitions (M&A) of listed companies. The 15 billion KRW convertible bonds (CB) recently issued by Haitron are also known to have been paid for with funds from loan shark Mr. K.

Repeated attempts to contact Haitron for comment on this matter were unanswered.