Law Supports Lee Soo-man... HYBE "Respect the Right Decision, Heavy Responsibility" (Comprehensive)

Injunction Granted on Issuance Ban of New Shares and Convertible Bonds Filed by Lee Soo-man
Lee Soo-man: "'Post-Lee Soo-man', for me, 'The Best' is HYBE"
HYBE: "Heavy Responsibility... Everything Will Find Its Place"

"I will carry a heavy sense of responsibility and prioritize the rights and interests of shareholders, members, and artists."

[Image source=Yonhap News]

On the 3rd, HYBE expressed this stance through an official statement after the provisional injunction application filed by former SM Chief Producer Lee Soo-man against SM Entertainment to prohibit the issuance of paid-in capital increase and convertible bonds was granted.

On the same day, the 21st Civil Division of the Seoul Eastern District Court (Presiding Judge Kim Yoo-sung) accepted the provisional injunction application filed by former Chief Producer Lee Soo-man against SM, issuing a provisional injunction prohibiting SM from issuing new shares and convertible bonds.

Earlier, on the 7th of last month, Kakao announced plans to acquire 1.23 million new shares issued in the form of a third-party allotment paid-in capital increase at the SM board meeting and secure 1.14 million shares (based on common stock conversion) through the acquisition of convertible bonds. If the contract was finalized, Kakao was expected to acquire a 9.05% stake and become the second-largest shareholder of SM.

In response, former Chief Producer Lee filed a provisional injunction application on February 8th, requesting the court to prohibit Kakao's issuance of new shares and convertible bonds. The court accepted Lee's application on the 3rd.

HYBE stated, "As the largest shareholder of SM, we respect the court's decision to grant the provisional injunction," adding, "Through this decision, the illegal attempt by SM's current management to influence the company's control will be clearly blocked, and now everything will return to its proper place."

They continued, "With a heavy sense of responsibility, we will continue to strive to ensure that SM establishes exemplary governance and becomes a company that prioritizes the rights and interests of shareholders, members, and artists."

Following the injunction ruling, former Chief Producer Lee Soo-man conveyed his position in a letter titled "SM was a challenge, happiness, and blessing to me."

Lee said, "I deeply regret the many recent events surrounding SM," and added, "The 'post-Lee Soo-man' era of SM has been a long-standing concern. I believed that SM should not be passed down to my children or relatives but to the 'best' in this industry who can make it flourish even more."

He further explained, "If there are problems with SM's governance, they should be improved, and if professional management is needed, those people should take charge without hesitation." He said his standard for the 'best' was producing, and over the past two years, he searched for the 'better best' suitable for SM and chose HYBE as that partner.

Lee, who said, "SM and HYBE were competitors, but BTS's success is a pride for all our people," also emphasized the background of transferring his shares to HYBE by stating about Chairman Bang Si-hyuk, "He lived obsessed with music like me and treats artists with the same affection as I do."

Lee said, "Having finished the chapter of my life as the appendix of SM, I am now moving on to the next chapter, where technology and culture meet." He expressed gratitude to SM's current management, employees, and artists, saying, "I have no regrets about the days I spent with you all. SM was a challenge, happiness, and blessing to me."

With the court's provisional injunction decision giving HYBE and Lee Soo-man an advantage in the SM acquisition battle, attention is focused on what countermeasures SM's current management and Kakao will take.