hy completes acquisition of 'Bureung' operator Mesh Korea... Becomes largest shareholder

The sale of Mesh Korea, the operator of the delivery agency service 'Boorung' that hy is pursuing to acquire, has been virtually completed.

According to Mesh Korea on the 23rd, at the extraordinary general meeting of shareholders held on the 23rd, Mesh Korea approved an amendment to the articles of incorporation to increase the total number of issued shares for hy's paid-in capital increase. Following the resolution, the total number of issued shares increased from the existing 20 million shares to 30 million shares. This also made possible a third-party allotment paid-in capital increase of approximately 80 billion KRW by hy.

After the capital increase, hy is expected to secure a 66.7% stake in Mesh Korea, becoming the largest shareholder. Additionally, at the board meeting on the same day, Mesh Korea appointed Cha Yoon-seo, Director of hy Investment Management Division, and Song Ok-hyun, Outside Director of hy Motors, as Investment Management Directors and Other Non-Executive Directors, respectively. Byung-koo Byun, Head of hy Investment Management Division, was appointed as the new auditor. Although a motion to dismiss the current management, including CEO Kim Hyung-seol, was discussed, it was rejected. Former CEO Yoo Jung-beom, an inside director, and auditor Yoo Han-sung were dismissed on the same day.

Prior to the sale to hy, Mesh Korea experienced internal strife as conflicts deepened between the current management and the former CEO. On the 8th of this month, Mesh Korea's board resolved a third-party allotment paid-in capital increase from hy for operational fund procurement. Approximately 80 billion KRW in scale, Mesh Korea had proactively received an emergency fund of 60 billion KRW from hy to complete debt repayment. At the board meeting on the 25th of last month, former CEO Yoo was dismissed and CEO Kim was newly appointed. Former CEO Yoo opposed the sale to hy, claiming the board's procedures were illegal and the sale unjust, and has been resisting. The current management has also filed complaints against former CEO Yoo for breach of trust, embezzlement, and fraud.

Mesh Korea delivery agency service 'Boorung'.
Photo by Mesh Korea

hy's acquisition of Mesh Korea is part of its strategy to advance as a comprehensive distribution company. It is interpreted as a foundation to strengthen distribution logistics networks and expand categories through various services. At a time when the Fresh Manager-centered Fresh Delivery service is being reinforced, acquiring Mesh Korea is expected to significantly expand categories following razors, cosmetics, and cards. Although Fresh Managers are deployed nationwide, there are still areas where delivery is difficult, and there is a limitation that only items that can be loaded onto the electric cart Coco can be delivered. Therefore, hy is expected to strengthen this gap with Mesh Korea's delivery platform Boorung personnel. It is also to utilize Mesh Korea's IT capabilities. The aim is to maximize synergy in the logistics business by leveraging Mesh Korea's strong IT capabilities.

CEO Kim said, "I am grateful to the shareholders who joined forces for the company's normalization and to hy, who helped at the critical moment when the rehabilitation procedure was imminent," adding, "Contrary to concerns, the company has been rapidly normalizing over about one month since my appointment, and we will focus on achieving the originally planned goal of turning a profit."