[Interview] TS Trillion "Efforts to Lift Trading Suspension... Will Expand Comprehensive Haircare Business"

Interview with Kim Yong-chae, CEO of TS Trillion
Stock trading halted due to management dispute aftermath
"Regret shareholder damage from unnecessary conflict...
Currently explaining performance and governance stability to the exchange"

“We are currently explaining our plan to stabilize management rights by securing friendly shares to the Korea Exchange. Since the majority of shareholders currently support us, we plan to expedite the resumption of trading to minimize inconvenience to shareholders and continue business expansion based on the recognition of the ‘TS’ brand.”

Kim Yong-chae, CEO of TS Trillion, poses ahead of an interview on the 20th at the TS Building in Yeongdeungpo-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

These are the words of Kim Yong-chae, CEO of TS Trillion, whom we met on the 20th at the TS Building in Yeongdeungpo-gu, Seoul. TS Trillion is a KOSDAQ-listed company famous for its ‘hair loss shampoo,’ but its stock trading has been suspended since last month due to the aftermath of a management rights dispute. This is because the founder and largest shareholder, former CEO Jang Ki-young, who is in conflict with the current management, filed for corporate rehabilitation of the company.

He asserted, “The lawsuits filed by the former management against the company are baseless and legally unfounded,” adding, “The unfortunate part is that TS Trillion’s shareholders are suffering because of this. We are doing our best to respond strictly and swiftly.”

Trading Suspended Since Last Month... “Making Every Effort to Resume Trading”

Earlier, former CEO Jang pursued the sale of TS Trillion’s management rights last year and signed a contract to transfer part of the management rights and shares to new investors including Cheonil Industrial. The problem arose when the management rights changed before the full payment of the remaining 1.5 billion KRW of the stock purchase price was made, and conflicts between former CEO Jang’s side and the current management over board composition intensified.

During this process, former CEO Jang filed a civil lawsuit against the company demanding the return of a loan of 11 billion KRW he had provided while serving as CEO. In April, he also filed for corporate bankruptcy of TS Trillion but later withdrew the application.

The current management gained the upper hand at the June extraordinary shareholders’ meeting. They secured a total of 45.68 million shares (42%) to pass the proposal to appoint CEO Kim as an inside director and rejected all candidates from former CEO Jang’s side, who held 31.62 million shares (29%). CEO Kim emphasized, “I believe small shareholders, who viewed the reckless management rights dispute with concern, supported us.”

However, after former CEO Jang filed for corporate rehabilitation on the 1st of last month, the Korea Exchange suspended trading of TS Trillion’s shares. Nevertheless, the Seoul Bankruptcy Court dismissed former CEO Jang’s application on the 12th of last month, stating that “it is difficult to see that the company is currently in a state of excessive debt or insolvency or likely to be so.” According to the Financial Supervisory Service’s electronic disclosure system, as of the first half of this year, TS Trillion’s total assets are approximately 70 billion KRW, and total liabilities are about 39.4 billion KRW.

Former CEO Jang’s side appealed the dismissal of the rehabilitation application. In addition, various lawsuits related to the management rights dispute, including lawsuits for nullity and cancellation of resolutions related to the June extraordinary shareholders’ meeting and loan claims, are ongoing.

The Korea Exchange plans to decide on the eligibility of TS Trillion for continued listing on the 27th. The current management is appealing to the Exchange that former CEO Jang’s interference in management rights is unjust. CEO Kim said, “Although the Seoul Bankruptcy Court found no grounds for former CEO Jang’s rehabilitation application, the suspension continues due to procedural manuals. The Exchange will review various criteria such as business continuity, management stability, and compliance with accounting standards, and we are sincerely communicating the company’s performance and improvements in governance to avoid a delisting review.”

He also said, “We are mainly emphasizing governance stability. Although the rights offering subscription, which was expected to be over 10 billion KRW, was limited to about 3.5 billion KRW due to former CEO Jang’s bankruptcy application and injunction against new share issuance, Cheonil Industrial participated as a member of the DS Association in April, increasing the total management rights holders’ share ratio to 12.4%, laying the foundation for management stabilization. Through a joint holding agreement, the shareholding ratio participating in management with voting rights has expanded to 19.78%,” he emphasized.

Kim Yong-chae, CEO of TS Trillion, is being interviewed at the TS Building in Yeongdeungpo-gu, Seoul on the 20th. Photo by Kang Jin-hyung aymsdream@

“Will Pay Loan According to Court Ruling... Aiming to Become a Comprehensive Hair Care Company”

Regarding the loan payment issue to former CEO Jang, he stated, “We will pay according to the court ruling to be issued in the future.” CEO Kim explained, “In the past, when the company needed about 10 billion KRW in funds, former CEO Jang himself tried to resolve it by injecting acquisition funds. However, this was a part where he was told to repay slowly without a separate due date. So we accepted and moved on, but now he claims that his lawsuits are ‘to receive the loan payment.’”

He said, “The court ruling on the loan claim will come out soon. Since we also have claims against former CEO Jang, if some offsetting occurs through the court ruling, we plan to pay accordingly.” Regarding payment capacity, he explained, “Currently, TS Trillion’s balance excluding real estate is about 12 billion KRW. Even if we are ordered to pay the entire loan, we can proceed without any problem.”

Separately from the dispute, he emphasized TS Trillion’s efforts to normalize management. CEO Kim said, “Although there is an uncomfortable view from outside due to the management rights dispute, the debt ratio and return on equity (ROE) improvement rate rank among the top in cosmetics companies.”

He added, “Through the current management’s efforts, the debt ratio has improved by more than 126% compared to before the transfer of management rights. Operating profit in the first half of this year increased by about 230 million KRW compared to the same period last year, reaching approximately 670 million KRW, and the operating profit margin quickly improved from 2.3% to 4.5%. Legal fees related to the management rights dispute amounted to about 700 million KRW in the first half, but if unnecessary costs do not occur, performance is expected to improve further in the second half.”

Regarding future investment attraction, he said, “Issuing convertible bonds (CB) is difficult while trading is suspended, so currently we are discussing rights offering plans. However, CB issuance will also be possible only after trading resumes.”

He also expressed the will to transform into a comprehensive hair care company beyond the hair loss business. He said, “Since joining the company, we have carried out three projects. We collaborated with external consulting firms to establish a preliminary foundation for business direction and strategy and are designing strategies to expand the business beyond hair loss into the entire hair care sector.”

He continued, “Currently, the majority of users are in their 40s to 60s. We plan to lower the age of customer experience and broaden the age group, entering relatively younger platforms such as Olive Young. Especially, the GD shampoo for teenagers, launched targeting teens, continues to show sales growth in the market. It is the highest-selling product within the TS brand on the global e-commerce platform Amazon.”

TS Trillion announced on the 30th of last month that actor Lee Jang-woo has been reappointed as the model for 'TS Shampoo'.

They are also reviewing ways to utilize real estate assets in Paju, Gyeonggi Province. The site is near Paju Unjeong Station on the GTX-A line, and a four-lane road construction is underway. CEO Kim said, “The site is about 10,000 pyeong (approximately 33,000 square meters) with an appraised value of about 36 to 37.7 billion KRW. However, since we carry a loan of about 18 billion KRW, it poses a burden on the company’s net income. We plan to quickly develop the land to generate profits and resolve interest and other issues. If necessary, we can sell it to eliminate debt and create surplus funds of about 20 billion KRW, which will be used for new business ventures and investments.”

Additionally, CEO Kim said, “No one is unaware of the TS brand. We will strive to be recognized even more by customers using this excellent brand as a weapon,” adding, “We will establish ourselves as a pillar of the K brand through global expansion.”