[At a Crossroads] Selfie Global② Unilateral Termination of Lithium Contract... Where Are the 6.7 Billion Won?

40 Billion Won Lithium Pump Contract Cancellation
Stock Price Rollercoaster Before and After Contract Announcement

Selfie Global, a KOSDAQ-listed company, has unilaterally canceled the lithium supply contract it signed with Lithium Plus last year. Additionally, a source revealed that Selfie Global exhibited suspicious behavior from the early stages of the contract by not following standard procedures. Given that Selfie Global's stock price surged sharply at the time of the contract signing, controversy is expected.

According to the financial investment industry on the 8th, Selfie Global's subsidiary Plus Materials has confirmed that it canceled the lithium hydroxide supply contract with Lithium Plus last month.

Previously, in August last year, Plus Materials, a subsidiary of Selfie Global, announced that it had signed a supply contract worth 4 billion KRW for lithium hydroxide with Lithium Plus. At that time, Lithium Plus was constructing a lithium hydroxide production plant, and Plus Materials intended to purchase the initial batch produced there.

Selfie Global stated, "We have signed a supply contract with Lithium Plus and plan to supply the first-produced lithium hydroxide to leading domestic secondary battery companies," and even added secondary battery material manufacturing and sales to its business objectives at an extraordinary shareholders' meeting.

The lithium supply contract was executed on August 23 last year. Plus Materials was established on August 19, and just four days after its establishment, it proceeded with the contract and deposited 2 billion KRW as a contract payment to Lithium Plus.

However, despite Lithium Plus completing the plant and producing the initial batch at the end of January, Plus Materials did not take delivery. During the contract period, there were no inquiries about the lithium products. Instead, Plus Materials requested a refund of the 2 billion KRW deposit instead of taking delivery of the lithium supply.

A representative from Lithium Plus said, "In a typical contract, due diligence of the production plant and sample testing are conducted, but Plus Materials demanded a supply contract without such processes. Since there was no reason to refuse a company willing to purchase the products, we proceeded with the contract. However, without even inspecting the products, Plus Materials first requested contract termination and refund of the deposit." Lithium Plus promptly refunded the 2 billion KRW deposit.

Although the contract was not actually fulfilled, Selfie Global's stock price fluctuated at the time of the contract. The first disclosure that Selfie Global had secured 100% of Plus Materials' shares was on August 26 last year. From a few days before this disclosure, Selfie Global's stock price began to rise, fluctuating between 3,000 KRW and 5,000 KRW.

Selfie Global first announced the contract with Lithium Plus on August 29, after the disclosure. On that day, the stock price dropped more than 9%, and on the following day, August 30, it plunged over 18% by market close. This pattern showed that the previously anticipated positive news was nullified upon the announcement.

Later, on September 23, Selfie Global again distributed materials stating that it would benefit from the lithium hydroxide contract with Lithium Plus. As a result, the stock price surged 10% that day and rose more than 22% during trading the next day. However, the contract was ultimately not executed, and Selfie Global's current stock price remains below 1,000 KRW.

Plus Materials, which had publicly announced the lithium contract on a large scale, is a corporation established with a 5 billion KRW investment from Selfie Global. Additionally, Selfie Global acquired 3.8 billion KRW worth of convertible bonds (CB) from Plus Materials and lent another 1.7 billion KRW.

In total, over 10 billion KRW was invested in the newly established Plus Materials. Although the acquired CB was repaid shortly after, as of the end of the third quarter last year, 6.7 billion KRW in investment and loans remained outstanding. Currently, only one employee works at Plus Materials' office located in Nonhyeon-dong, Gangnam-gu, Seoul.

The CEO of Plus Materials is Yoonho Seo, born in 1993. The internal director is Ji-in Park, born in 1997. Another internal director, Sangjeong Han, previously served as the Strategic Planning Director at EDM Company and CEO of Coaster Networks. Han was also a candidate for internal director at KOSDAQ-listed Cosnine in 2018. Coaster Networks created a cryptocurrency called Freepi Coin in 2019.

Meanwhile, inquiries about the reason for canceling the contract with Lithium Plus and the current status of Plus Materials were made to the company, but no response was received.