[At a Crossroads: Alois②] Hundreds of Billions Supported to 'Deficit' Company... Only Enriching Executives

Providing Hundreds of Billions in Loans and Debt Guarantees to 'Seongwoo Enterprise'
Key Executives Are Shareholders of Seongwoo Enterprise... Controversy Over Private Gain

A KOSDAQ-listed company, Alois, which caused controversy by selling illegal set-top boxes, has been revealed to be supporting a deficit company with hundreds of billions of won. In particular, key executives of Alois are positioned in this company, raising concerns that they are pursuing personal gains using Alois's funds.

According to the Financial Supervisory Service's electronic disclosure system on the 11th, Alois acquired 4 million shares (59.49%) of a corporation called Seongwoo Enterprise through a third-party allotment paid-in capital increase in September last year, spending 7 billion won.

Seongwoo Enterprise is a newly established corporation founded on July 6 last year by Kwon Choong-sik, CEO of Alois. Its business purpose includes manufacturing concrete tiles, roof tiles, bricks, and blocks.

The initial investor of Seongwoo Enterprise was BM Holdings. BM Holdings is an affiliate of Alois, where Han Geo-nam, Executive Director of Management at Alois, is a shareholder. BM Holdings initially invested 350 million won in Seongwoo Enterprise, securing 700,000 shares at the par value of 500 won per share.

About two months later, Alois acquired shares of Seongwoo Enterprise at 1,750 won per share. Although Seongwoo Enterprise had not yet started its business in earnest, thanks to Alois's expensive investment, BM Holdings' equity value increased by 250%.

Moreover, in May, Alois additionally invested 4 billion won in Seongwoo Enterprise. This was a conversion of a loan that could not be repaid into equity. At that time, the price per share was set at approximately 3,570 won. This means that shares of a corporation established only a few months prior were acquired at more than 600% above par value.

However, Seongwoo Enterprise's actual performance is poor. As of last year, Seongwoo Enterprise recorded sales of 1.2 million won and a net loss of 400 million won. Up to the third quarter of this year, sales were 2.5 billion won with a net loss of 4.2 billion won. The deficit appears to be continuously expanding since the start of the business.

Despite Seongwoo Enterprise's poor performance, Alois continues to support it. In addition to equity investment, Alois lends money and even provides debt guarantees.

As of the end of the third quarter this year, Alois has lent 12.6 billion won to Seongwoo Enterprise. There are also about 600 million won in accounts receivable and accrued income from Seongwoo Enterprise. Additionally, Alois has provided debt guarantees for approximately 10.4 billion won of loans Seongwoo Enterprise borrowed from banks. When combining all equity investments, loans, and guarantees to Seongwoo Enterprise, it accounts for about 80% of Alois's net assets.

In this way, if Seongwoo Enterprise conducts business using Alois's money, other shareholders of Seongwoo Enterprise can sit back and enjoy profits. If Seongwoo Enterprise goes bankrupt, Alois may not recover hundreds of billions of won, but shareholders only lose their invested capital. Conversely, if Seongwoo Enterprise succeeds, the shareholders share the fruits. The risk is borne entirely by Alois, while the rewards are shared by Seongwoo Enterprise shareholders.

As of the end of September, the shareholders of Seongwoo Enterprise are Alois (60.6%), Seongwoo File (29.7%), BM Holdings (6.3%), and key executives of Alois such as Shin Jeong-gwan, Vice President of Alois, and Lee Si-young, Head of Alois Research Institute. Alois's major executives are listed as shareholders of Seongwoo Enterprise.

Furthermore, Seongwoo File, the second-largest shareholder of Seongwoo Enterprise, holds a call option to purchase 1 million shares of Seongwoo Enterprise owned by Alois later. This contract favors Seongwoo File, allowing them to acquire shares via the call option if Seongwoo Enterprise does well, or leave the shares with Alois if it does not.

Repeated inquiries were made to Alois regarding these matters, but no response was given.