[At a Crossroads for Listed Companies] Geumseong Chuksan Jinhung Invested by IM Borrows Money from Biolog Devices for Capital Increase④

Raising Funds Using Real Estate Collateral
After Acquiring BiologDevice
IM Takes Loan for Paid-in Capital Increase
Low Ability for Self-capital Procurement

[Asia Economy Reporter Jang Hyowon] It has been identified that Geumseong Livestock Promotion, a corporation that decided to conduct a paid-in capital increase of 5 billion KRW in IM, a KOSDAQ-listed company, is raising the capital increase funds by borrowing money from another listed company, Biolog Device. Geumseong Livestock Promotion acquired Biolog Device through a loan earlier this year.

According to the Financial Supervisory Service on the 21st, IM announced on the 16th that it would proceed with a third-party allotment paid-in capital increase worth 5 billion KRW. The allottee is a corporation named ‘Geumseong Livestock Promotion.’ The issue price per share is 1,165 KRW, which is a 10% discount compared to the reference stock price. The payment date is set for the 30th of this month.

If the capital increase proceeds, 4,291,845 new shares will be issued, accounting for about 6.38% of the total shares. In this case, Geumseong Livestock Promotion is expected to become the largest shareholder of IM.

Previously, during the process of former CEO Park Secheol selling the company, the ownership changed hands several times within a short period. Eventually, on the 9th, Choi Youngran, who held a 7.47% stake, sold all her shares on the market, leaving IM without a major shareholder.

It is analyzed that Geumseong Livestock Promotion will raise about 2.4 billion KRW of the 5 billion KRW capital increase funds by borrowing from Biolog Device. On the 15th, Biolog Device announced that it would lend 2.4 billion KRW to Geumseong Livestock Promotion until September 30.

Geumseong Livestock Promotion is the largest shareholder of Biolog Device. It acquired Biolog Device for 18 billion KRW in March. It appears to be a structure where funds are borrowed from the acquired company to provide capital for IM’s capital increase.

Geumseong Livestock Promotion is a corporation engaged in livestock farming and real estate leasing. The largest shareholder is Mr. Jo Jeonggyu, holding a 26% stake, and the CEO is Mr. Hwang Hoon. CEO Hwang is known to operate companies such as Eun San Enterprise and Bio Impact.

Geumseong Livestock Promotion is analyzed to have limited ability to raise capital on its own. As of the end of June last year, Geumseong Livestock Promotion was a company with total assets of 4.1 billion KRW. Its annual sales averaged around 900 million KRW over three years, and operating profit was about 60 million KRW.

When acquiring Biolog Device, it raised funds by pledging owned real estate as collateral. After acquiring Biolog Device with borrowed money, it borrowed money again from Biolog Device to raise funds for IM’s paid-in capital increase.

Meanwhile, besides this capital increase, IM had planned to conduct a separate paid-in capital increase worth 10 billion KRW by the previous day, but the payment date has been postponed to September 28.