Minority shareholders of RaemongRaein, acquired by Artist United, have filed a provisional injunction to suspend the effectiveness of new share issuance, while Artist United pointed out that "it is quite questionable whether these minority shareholders are friendly shares related to CEO Kim Dong-rae, who is refusing the transfer of management rights."
On the 19th, Artist United's legal representative, law firm Lin, issued a statement saying, "Following the provisional injunction to suspend the effectiveness of new share issuance filed by RaemongRaein minority shareholders on the 14th, RaemongRaein's stock price dropped sharply by more than 6% on the 17th," and explained, "RaemongRaein's stock price, which had been continuously declining due to poor performance over recent years, was significantly rebounding this March following Artist United's acquisition of RaemongRaein."
In particular, the market paid great attention to the synergy generated by Artist United, whose largest shareholder is director Lee Jung-jae, who is enjoying the peak of his career as both an actor and director, acquiring a drama production company, and this led to a rise in stock price, welcomed by most shareholders including minority shareholders.
Artist United stated, "In this situation, the moves by some minority shareholders to nullify the new share issuance raise considerable suspicion," and added, "First, RaemongRaein is a company that has recorded significant losses consecutively in recent fiscal years, requiring managerial and financial changes, so the paid-in capital increase is a positive event."
They also pointed out, "Minority shareholders claim there is no basis for the paid-in capital increase as the company has cash assets amounting to 26 billion KRW, but ▲ considering that if the recent business losses continue, the cash would not last for the next five years ▲ and given the recent sharp rise in content production costs such as OTT, the funds needed to produce large-scale works or invest in IP (intellectual property rights), the claim that 26 billion KRW is sufficient is a one-sided assertion."
Furthermore, regarding minority shareholders' claims that this paid-in capital increase exceeded the issuance limit stipulated in the articles of incorporation, diluting existing shareholders' stakes and voting rights, Artist United explained, "The shares issued through this new paid-in capital increase amount to approximately 2.92 million shares, which only exceeded the 40% issuance limit in the articles of incorporation by 1.99%. Considering that the total number of shares held by the 12 shareholders who filed the lawsuit is 45,662 shares (0.5%), it is questionable whether it is reasonable to harm the interests of newly incoming shareholders and market order through active trading after the capital increase just to protect diluted stakes and voting rights caused by an issuance exceeding the limit by about 2%."
Finally, they stated, "According to media reports, the shareholders who filed the injunction claim without any basis that Artist United's purpose in acquiring RaemongRaein is suspicious, which aligns with CEO Kim Dong-rae's groundless slander that Artist United intends to use RaemongRaein as a shell," and added, "From this perspective, it is quite questionable whether the minority shareholders who filed the injunction truly represent the company's shareholders, protect shareholders' rights, and suggest the company's proper direction, or whether they are friendly shares related to CEO Kim, who is refusing the transfer of management rights to Artist United."
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