[At a Crossroads] Parkers② Owner 2nd Generation Management Causes Tens of Billions in Losses with 'Alrok'

100 Billion Won Support to Alok in Complete Capital Erosion
Additional 1 Billion Won Loan Despite Partial Loss Processing

KOSDAQ-listed company Parkers has reportedly provided over 10 billion KRW in support to beauty device company Aalok, which is managed by the second-generation owner holding shares. Currently, Aalok is in a state of complete capital erosion, making the recovery of funds uncertain. Due to this, Parkers has already recorded losses amounting to several billion KRW.

According to the Financial Supervisory Service's electronic disclosure system on the 10th, Parkers announced that it will extend the maturity of the collateral provided for the 7 billion KRW loan borrowed by its subsidiary Aalok from the Industrial Bank of Korea from the original May 24 to November 24.

Since 2022, Parkers has been providing real estate such as land and buildings as collateral for Aalok's debt. The collateral amount is 8.4 billion KRW, which is 120% of the principal. If Aalok fails to repay the 7 billion KRW, Parkers will have to transfer the real estate.

Aalok is a beauty device distribution company established in 2022 with a capital of 1.5 billion KRW. It sells products such as the ultrasound and radiofrequency device UltraChange, hair loss mitigation device HairBird, and pain relief infrared irradiation device Aalok Patch. The main products are manufactured by Parkers and then sold by Aalok.

Parkers has not only provided collateral but also directly lent money to Aalok. As of the end of the first quarter this year, Parkers has loaned 3.8 billion KRW to Aalok. Additionally, accounts receivable from sales on credit to Aalok amount to about 3.4 billion KRW.

The CEO of Aalok is Park Heon-woo, the son of Park Chang-sik, CEO of Parkers. Director Park is the major shareholder holding 17.89% of Aalok's shares. It is understood that he acquired the shares when Parkers established Aalok in 2022.

Born in 1988, Director Park has been working at Parkers since 2017. His current position is Head of the Healthcare Business Division. The rest of Aalok's management includes CEO Park Chang-sik and President Park Young-tae of Parkers. President Park Young-tae is also a related party of CEO Park, making the company effectively family-run.

As of the end of the first quarter this year, Aalok's total assets stand at 2.6 billion KRW, with total liabilities of 14.7 billion KRW, indicating a state of complete capital erosion. In its first year of establishment in 2022, Aalok recorded sales of 1.7 billion KRW and a net loss of 6.5 billion KRW, and last year, sales were 3.1 billion KRW with a net loss of 6.3 billion KRW. The large accumulated losses have completely depleted the capital.

Most of Aalok's debt comes from Parkers. Adding the 7 billion KRW loan Aalok borrowed from the Industrial Bank of Korea secured by Parkers' real estate, the 3.8 billion KRW loan, and the 3.4 billion KRW accounts receivable, the total reaches 14.2 billion KRW, matching Aalok's total liabilities. If Aalok were to be liquidated immediately, Parkers is expected to recover only about 2.6 billion KRW of this amount.

In fact, Parkers set aside 2.8 billion KRW of the loan to Aalok as an allowance for doubtful accounts at the end of last year. This reflects part of the unrecognized equity method loss as a loss provision for the loan. Typically, companies record an allowance for doubtful accounts and recognize losses when the likelihood of recovering money is low. This is the reason for Parkers' increased deficit.

Despite already setting the loan as an allowance for doubtful accounts, Parkers lent an additional 1 billion KRW to Aalok in the first quarter of this year. During the same period, Parkers recorded an operating loss of 500 million KRW.

Meanwhile, multiple attempts to contact Parkers for inquiries regarding the reasons for support to Aalok went unanswered.