[Exclusive] P&I Invest Pressures RaemongRaein of 'The Youngest Son of a Conglomerate' with Shareholder Proposal

Dissatisfaction with Paid-in Capital Increase Favoring Controlling Shareholders
“Will Propose Auditor Appointment and Others at March Shareholders' Meeting”

[Asia Economy Reporter Lim Jeong-su] Laemmong Laein, the production company behind the hit series 'The Youngest Son of a Conglomerate Family,' has entered a phase of management rights dispute. Investor P&I Investment, which requested to inspect and copy Laemmong Laein's accounting books, threatened to consider shareholder proposals such as appointing auditors, claiming that Laemmong Laein conducted an unnecessary paid-in capital increase in a way favorable only to the controlling shareholders.

On the 17th, P&I Investment stated in a written response to questions about the background of their request to inspect and copy the accounting books that they made the request to verify whether the recent paid-in capital increase by Laemmong Laein was actually necessary.

According to P&I's analysis, Laemmong Laein recorded operating and net profits for the past three years and raised a large amount of public offering funds during its transfer listing from KONEX to KOSDAQ in 2021. Although it recorded an operating loss of 2 billion KRW and a net loss of 2.3 billion KRW up to the third quarter of last year, sufficient cash holdings are expected this year due to the huge success of the drama 'The Youngest Son of a Conglomerate Family,' making a separate paid-in capital increase unnecessary. Short-term borrowings are also only 5.6 billion KRW.

However, in December last year, Laemmong Laein announced a third-party allotment paid-in capital increase of 9 billion KRW by issuing Convertible Preferred Shares (CPS). A P&I analyst pointed out, "Given the cash liquidity situation, the capital increase does not seem necessary," and added, "Considering △ the discount rate applied to the CPS issuance price △ the fact that conversion price adjustment (refixing) is only possible when the stock price falls △ the 30% CPS having a put option, it is suspected that there is an intention to strengthen the controlling shareholder's control while harming minority shareholders."

P&I also explained that if Laemmong Laein is indeed in a situation requiring a capital increase, it is necessary as shareholders to review whether CEO Kim Dong-rae and the major shareholder, WIZIWOKS Studio, are properly controlling the company's expenses. They added, "We also intend to examine through the accounting books whether the management and major shareholders are managing with consideration for the interests of all shareholders," and stated, "If it is judged necessary to check the management, we plan to make various shareholder proposals to enhance shareholder value, including appointing outside directors and auditors at the shareholders' meeting to be held in March."

Meanwhile, P&I holds just under 5% of Laemmong Laein's shares through P&I Cultural Creation Investment Association and P&I Cultural Technology Investment Association. As of the end of September last year, the largest shareholder of Laemmong Laein, WIZIWOKS Studio, and CEO Kim held 34.52% of the shares.