[At a Crossroads: The Listed Company]② The Second Major Shareholder Who Committed Muk-Twi

Activist 2nd Largest Shareholder Gains Over 6x Profit
Zaigle "Synergy Effect → Separate Unrelated Entity"

As the paid-in capital increase for Zaigle's new secondary battery business continues to be delayed, the activist second-largest shareholder private equity fund is causing controversy by selling shares when the stock price was at its peak. Moreover, Zaigle is escalating the controversy by drawing a line, claiming that the private equity fund is an unrelated entity immediately after selling the shares, despite having promoted cooperation with the fund for the new business.

According to the Financial Supervisory Service's electronic disclosure on the 5th, Company K first appeared in Zaigle's disclosure on December 1 last year. This is because K held 3.02% and a special related party, JD Holdings, held 2.01% of Zaigle's shares. If the total shareholding including special related parties exceeds 5%, a large shareholder report must be submitted.

Along with this, K announced that it would start shareholder activism in Zaigle beginning with acquiring shares. K introduced itself as a newly established hedge fund. Its main fund managers previously led operation teams at Hyundai Securities and Daishin Securities, managing about 14 trillion KRW in assets. However, the disclosure lists K as engaged in other financial businesses (non-financial holding company), not as a professional private equity fund.

A few days later, Zaigle supported K by stating that K would contribute to the company's growth by sharing its own corporate, financial, and human networks with Zaigle. Furthermore, even after K's disclosure of acquiring the 5% major shareholder stake, Zaigle said it planned to continue investing from a long-term perspective and actively support synergy effects with Zaigle's business.

About three weeks later, Zaigle announced its secondary battery new business plan. Zaigle is a company that manufactures cooking appliances such as electric grills. It has no relation to secondary batteries. Nevertheless, Zaigle acquired the secondary battery business division of a company called CM Partners for about 7.4 billion KRW. Due to insufficient funds, most of the acquisition money was raised through loans. Zaigle also declared plans to expand a gigawatt-scale factory to produce LFP (lithium iron phosphate) batteries domestically.

Zaigle's stock price began to rise significantly from March. The stock price, which had been trading in the 4,000 KRW range, soared to 38,900 KRW within about a month. This is an increase of over 800%. In response, the Korea Exchange requested an inquiry disclosure, and Zaigle stated that it was negotiating details regarding the establishment and investment of a secondary battery joint venture (JV) in Virginia, USA. It also announced a paid-in capital increase of 30 billion KRW, raising expectations for the new business.

As the stock price rose due to the secondary battery issue, K, the second-largest shareholder, suddenly sold its shares. This was about three months after announcing it would be a long-term investor as an activist fund. From March 24, K sold 141,983 shares on the market, cashing out about 3.3 billion KRW. The highest price per share was 30,214 KRW. Considering that K accumulated Zaigle shares at an average price of 4,000 to 5,000 KRW, it made a profit of more than six times.

After K earned huge profits, Zaigle's stock price declined. As of the previous day, Zaigle's stock price was 17,250 KRW, down about 55% from the peak. With the paid-in capital increase delayed and the new business progressing slowly, the stock price continues to trend downward.

Following K's stock sales and the subsequent price drop, Zaigle began distancing itself. This stance contrasts with the announcement last December when Zaigle said it would enter the new business in cooperation with K. A Zaigle official stated, "K is a separate entity unrelated to Zaigle, and we have not received any information regarding the use of the shares."

Meanwhile, Zaigle's 30 billion KRW paid-in capital increase, announced in April, has been delayed twice.