Min Hee-jin Exercises 26 Billion Won Put Option at HYBE... Why Now When She Could Receive Twice as Much?

Notification of Put Option Exercise According to Shareholders' Agreement Earlier This Month
NewJeans Sends Certified Letter Demanding Min Hee-jin's Return
'Shareholders' Agreement Dispute'

Former ADORE CEO Min Hee-jin is reported to have exercised a put option (stock purchase right) on her shares in ADORE, a subsidiary of HYBE, earlier this month.

According to the music industry on the 14th, Min notified HYBE of her intention to exercise the put option on her ADORE shares earlier this month. According to the court injunction decision issued in May, which restricted Min's voting rights on her dismissal, if Min exercises the put option, the exercise price is calculated as "the average operating profit of ADORE over the past two years multiplied by 13, then divided by the total number of issued shares," allowing her to receive 75% of her 18% stake.

Since Min exercised the put option earlier this month, the calculation period is 2022?2023. ADORE's operating loss in 2022, the year NewJeans debuted, was 4 billion KRW. Although operating profit surged to 33.5 billion KRW in 2023, because the base years are 2022?2023, the amount Min can receive is estimated to be about 26 billion KRW.

Industry insiders expect that if Min had exercised the put option two months later in 2025, this year's operating profit would have been reflected, and she would have received at least twice the current amount. Therefore, there is growing interest in the background behind Min accepting a loss of hundreds of billions of won within two months.

However, just because Min exercised the put option does not mean she can immediately receive the full amount. Min was previously notified of her dismissal by the ADORE board. HYBE currently claims that the shareholder agreement with Min, who is an inside director, has been terminated. HYBE has filed a lawsuit to confirm the validity of the shareholder agreement with Min, and the outcome of this lawsuit is expected to determine the result of Min's put option exercise.

Additionally, it is reported that a former vice president of ADORE, a close associate of Min, also exercised the put option.

Group NewJeans. [Photo by ADORE]

On the 13th, NewJeans members sent a certified letter to their agency ADORE regarding "requests to correct violations of exclusive contracts," sparking various speculations about Min's put option exercise. In the letter, NewJeans members added that "if the requested matters are not corrected within 14 days, they will terminate the exclusive contract." The 14-day period corresponds to the grace period for contract termination under the Standard Exclusive Contract for Popular Culture Artists.

The correction requests include civil and criminal actions regarding the misconduct and illegal acts such as breach of trust mentioned in HYBE's internal report revealed through recent national audits and media reports, as well as an official apology for the "ignore her" remark directed at NewJeans member Hanni. The letter also includes a demand for Min's reinstatement as CEO.

ADORE responded to the certified letter by stating, "We will do our best to resolve this wisely so that we can continue to work with the artists."

Regarding claims related to the listed company raised by some, Min categorically denied them, saying, "(Some claims that I am connected to a listed company) are groundless." ADORE asked several questions, including "whether NewJeans members' relatives are involved and whether Director Min Hee-jin met with the company in question," to which Min's side responded, "It is groundless."

Earlier last month, Min appeared on the YouTube channel of music critic Kim Young-dae and stated, "I have never tried to leave the company as HYBE claims," adding, "I am constantly suffering from strange framing and being falsely accused," denying rumors about her independence.