[At a Crossroads] Jeonjin Bio Pharm① 'Delisting Crisis' BK Tops Management Joins

BKtops Executive Team Proposes Director Appointment Agenda
Director Who Managed During BKtops Opinion Rejection Also Included

The management team of ‘BK Tops,’ a company facing delisting, is expected to join Jeonjin Bio Pharm, a KOSDAQ-listed company currently undergoing a sale process. Since they have been managing BK Tops from before it received a disclaimer of opinion and was suspended from trading until now, there is growing interest in how this will affect Jeonjin Bio Pharm in the future.

According to the Financial Supervisory Service’s electronic disclosure on the 18th, Jeonjin Bio Pharm significantly added new director appointments through a corrected notice of the shareholders' meeting convening resolution on the 14th. The original proposal to appoint three inside directors and two outside directors was changed to nine inside directors and four outside directors.

Among the newly included board members, director candidates Jeong Sang-ryong, Cheon Hyeong-jun, and Choi Deok-hwan are executives of BK Tops, a KOSPI-listed company. Jeong Sang-ryong is the CEO and largest shareholder of BK Tops and has been leading the company since 2021.

BK Tops was formerly known as Dongyang Networks. The system integration (SI) division was separated from Dongyang Networks and renamed BK Tops. The company currently operates businesses such as home appliance distribution, intermediate recycling processing, and mask sales.

BK Tops has been suspended from stock trading since May 2022 due to a disclaimer of opinion. At that time, it was granted a remediation period and underwent a review of its improvement plan implementation in November last year, but the Korea Exchange ultimately decided on delisting. BK Tops filed an injunction to suspend the delisting effect in December last year, and the case is still ongoing.

Currently, BK Tops is financially distressed. As of the end of the third quarter last year, its standalone debt ratio exceeded 1080%, and its cash equivalents were around 200,000 KRW. The accumulated sales until the third quarter were 4.5 billion KRW, with a net loss of 9.9 billion KRW. Depending on the fourth quarter results, there is concern about complete capital erosion. In February, it also failed to repay 21 billion KRW in corporate bond principal and interest.

Additionally, CEO Jeong was embroiled in allegations of board forgery, false disclosure, and embezzlement of company funds in 2022. One of the reasons for BK Tops’ disclaimer of opinion was the suspicion that he received deposits for scrap metal resale through his personal account or corporation. At that time, CEO Jeong stated that the money he lent to BK Tops was offset by the scrap metal sales deposits. He said, "The party who filed the complaint withdrew it, and after registering the scrap metal, we are continuing to repay creditors."

Besides BK Tops’ management, the new director appointment proposals also include names of executives from listed companies such as Cosnine and Kosen. Among the new director candidates, Kim Ki-hyun, an inside director candidate, served as chairman of Cosnine until last year. Kim Cheol-soon is currently a director at Cosnine, and Baek Gwang-yeol is the CEO of Cosnine. Former Kosen chairman Kim Ki-tae is also listed as a director candidate.

The market has expressed concerns about executives from a company facing delisting joining the new management of Jeonjin Bio Pharm. These individuals managed BK Tops at the time of the disclaimer of opinion, and BK Tops has yet to recover properly.

Attempts to contact CEO Jeong for comment were unsuccessful.

Meanwhile, Jeonjin Bio Pharm’s largest shareholder, Lee Tae-hoon, and one other person signed a contract in October last year to transfer 553,085 shares to a corporation named Davin BNS at 39,777 KRW per share, totaling 22 billion KRW. However, the payment deadline has been postponed six times, and the current payment date is set for the 28th. The market expects the payment to proceed as the new director appointment proposals have been submitted.

Jeonjin Bio Pharm’s regular shareholders’ meeting is scheduled for the 29th. Along with the new director appointments, an agenda to add new business purposes will be discussed. The new business purposes include ▲mining and mineral smelting ▲telecommunications construction ▲online commerce ▲game software development, among others.