Expecting Synergy Between GP Club's 'Capital' and Lithium Insight's 'Technology'

Korea SE to Hold Extraordinary General Meeting on 13th Next Month to Add Business Objectives
Expectations for Lithium Value Chain Construction... Plans to Raise 100 Billion Won in Funding

[Asia Economy Reporter Hyungsoo Park] Cosmetic company GP Club, which operates the cosmetic brand JM Solution, is acquiring Korea SE. GP Club will collaborate with Lithium Insight, a company with lithium-related technology, to develop Korea SE into a lithium company.

According to the Financial Supervisory Service’s electronic disclosure system on the 7th, Korea SE will raise 100 billion KRW by issuing convertible bonds (CB) and bonds with warrants (BW).

The first series of CB will see investments of 25 billion KRW each from GP Club and Lithium Insight. The coupon rate and maturity interest rate are 1.0% and 2.0%, respectively. The conversion price is 3,304 KRW, and conversion can begin from December 1 of next year.

The first series of BW will have investments of 25 billion KRW each from GP Club and Lithium Club Private Equity Fund No.1. The coupon rate and maturity interest rate are 1.0% and 2.0%, respectively. The exercise price of the warrant is 3,304 KRW, exercisable from December 1 of next year.

Lithium Insight, which is acquiring Korea SE’s CB, possesses lithium refining technology that manufactures ultra-high purity lithium carbonate and lithium hydroxide for secondary batteries using low-grade lithium compounds. Utilizing this refining technology allows for more efficient production of ultra-high purity lithium carbonate and lithium hydroxide for secondary batteries compared to methods using expensive lithium ore. Regarding Lithium Insight’s shareholding status, CEO Jeon Woong holds 10%, while Jeon Yumi and Jeon Yuri each hold 20%. In the last fiscal year (November 18, 2021 to December 31, 2021), the company recorded no sales and a net loss of 3 million KRW. Its capital stock is 67 million KRW.

GP Club is acquiring 2.81 million existing shares from Korea SE’s largest shareholder CEO Nam Hong-gi and Director Nam Jin-gi for 15.1 billion KRW. It will also acquire 3.08 million new shares worth 7 billion KRW by participating in Korea SE’s third-party allotment capital increase.

GP Club rapidly expanded its scale after launching the cosmetic brand 'JM Solution' in China in 2016. Its flagship product, the 'Honey Glow Mask Pack,' gained popularity in China, leading to its entry into the domestic market in 2019. Global investment bank Goldman Sachs PIA invested 75 billion KRW in 2019. Last year, GP Club recorded sales of 535.5 billion KRW and operating profit of 52.7 billion KRW. As of the end of last year, its cash and cash equivalents amounted to 153 billion KRW, and short-term financial products totaled 51.1 billion KRW. The debt ratio was 12.6%. As of the end of last year, CEO Kim Jung-woong held 47.9% of shares, while Park Ok and Kim Li-won held 32.1% and 13.5%, respectively.

GP Club aimed to secure as many shares as possible through the third-party allotment capital increase but will acquire new shares within the issuance limit stipulated in Korea SE’s articles of incorporation. An extraordinary general meeting of shareholders is scheduled for the 13th of next month to propose an amendment to the articles of incorporation to expand the issuance limit for the third-party allotment capital increase. After amending the articles of incorporation, it plans to raise funds through a capital increase. However, due to the sharp rise in stock price, it seems difficult for GP Club to secure shares up to the planned level.

At the extraordinary general meeting, Korea SE will add business purposes such as ▲manufacturing and sales of secondary battery materials ▲manufacturing and sales of electronic semiconductor materials ▲manufacturing and sales of fuel cell materials. Having secured large-scale funds, Korea SE is expected to either directly produce through lithium facility investments or acquire companies equipped with such facilities.