Soo-man Lee Takes Legal Action Against SM... Intensifying Management Dispute

Injunction Application at Seoul Eastern District Court

Lee Soo-man, the founder and major shareholder of SM Entertainment, filed an injunction against SM in court on the 8th, initiating legal action.

HwaWoo Law Firm, Lee Soo-man's legal representative, announced in a press release that they submitted an injunction petition to the Seoul Eastern District Court to prohibit the issuance of new shares and convertible bonds.

HwaWoo stated, "When issuing new shares and convertible bonds to a third party who is not an existing shareholder, it must be necessary to achieve business objectives, and the method chosen must minimally infringe on the shareholders' preemptive rights to the extent necessary to achieve those objectives. The resolution to issue new shares and convertible bonds this time is an illegal resolution that fails to meet both of these requirements."

The SM management held an emergency board meeting the previous day and resolved to issue approximately 111.9 billion KRW worth of new shares and 105.2 billion KRW worth of convertible bonds to Kakao through a third-party allotment. Through this, Kakao will secure about 9.05% of the shares, becoming the second-largest shareholder. On the other hand, Lee Soo-man, the largest shareholder holding 18.46%, will see his shareholding ratio decrease. In response to the news of the partnership between SM and Kakao, Lee Soo-man has opposed it, calling it "illegal."

HwaWoo said, "Since the payment date for the new shares and the issuance date of the convertible bonds resolved by the SM board of directors is June 6th next month, we requested the court to grant the injunction before that date and to promptly set a hearing date."