[Asia Economy Reporter Jang Hyowon] Kosdaq-listed company Ilya announced that it has canceled the management rights transfer contract. The company stated that the contract was terminated because the transferee did not pay the remaining balance.
However, the transferee claims that despite having already prepared the remaining payment, Ilya CEO Kang Jeonghun unilaterally broke the contract by demanding the purchase of his own mandatory holding shares, which were not included in the contract and cannot be sold.
According to the Financial Supervisory Service’s electronic disclosure on the 14th, Ilya announced that the transfer contract for 3,397,931 shares (10.18%) held by Chairman Kang Jaeu and one other person was canceled the day before. The reason for the contract termination was non-payment of the remaining balance, and the deposit was forfeited.
Previously, on November 14 last year, Chairman Kang Jaeu, the largest shareholder of Ilya, signed a contract to transfer a total of 10.18% of shares held by himself and his wife Han Seungja to IP Parts for 6 billion KRW. IP Parts paid a deposit of 2 billion KRW on the contract day, and the remaining 4 billion KRW was to be paid upon closing the transaction.
The original closing date was December 27 last year. Ilya also resolved to hold an extraordinary general meeting of shareholders on that day. However, the closing date was postponed three times to January 11, January 30, and February 17.
According to IP Parts, the reason for the continuous delay in closing the transaction was CEO Kang Jeonghun’s unreasonable demands. CEO Kang is the son of Chairman Kang Jaeu and became the largest shareholder of Ilya in 2018. He currently holds 9.98% of the shares, making him the largest shareholder.
The reason CEO Kang’s shares were excluded from this management rights transfer contract is that all of his shares are under mandatory lock-up until 2025. CEO Kang decided to lock up all his shares when Ilya’s sales plummeted due to LG Electronics’ withdrawal from the smartphone business in 2020, which led to a trading halt.
Nevertheless, according to IP Parts, CEO Kang demanded 7 billion KRW on the condition that he would take his shares after the lock-up is lifted in 2025. It is claimed that he also proposed specific conditions such as providing his house as collateral until 2025.
Additionally, CEO Kang demanded repayment from IP Parts for about 6 billion KRW of guarantees he provided for Ilya’s debts. The contract stipulated that the CEO’s debt guarantees would be canceled after the extraordinary general meeting. However, he requested the guarantee cancellation before the management rights were transferred.
IP Parts stated, “CEO Kang, who is not even a transferee of the shares, kept demanding money from us and requested terms not included in the contract, so we did not receive the remaining payment. Then, despite the escrow date for the remaining payment being February 14, three trading days before the extraordinary general meeting, he unilaterally announced the contract termination the day before.”
They added, “The party responsible for delaying the contract with unreasonable demands despite the remaining payment being ready is CEO Kang’s side, and they are also responsible for the contract termination. We plan to proceed with lawsuits related to the return of the deposit and penalty damages.”
In response, an Ilya official said, “The final closing date was originally January 30, but the buyer could not prepare the remaining payment, so the deal fell through then. Nevertheless, the extraordinary general meeting date was postponed to February 17 to avoid penalty points from the exchange, and they intended to reject all agenda items if the meeting was held.”
He also explained, “The debt guarantees provided by CEO Kang to the company do not have a clause in the contract about when they will be canceled after the management rights change, so we requested a supplementary agreement, but it was not accepted, which is why we asked for debt repayment. Other requests were made as safety measures to ensure the company’s survival while CEO Kang’s lock-up period still has two and a half years remaining.”
Ilya is a company specializing in manufacturing mobile phone parts molds. Due to the termination of transactions with LG Electronics, it is securing new items and operates the shabu-shabu franchise brand ‘Kkotmareum.’ Last year, it recorded sales of 11.1 billion KRW and an operating loss of 4.3 billion KRW, turning to a deficit.
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