Unjel, Aiming to Defend Management Rights with Treasury Shares

Revival of Voting Rights through Share Swap with Iruon
Is It a Check on The One MTS Threatening Majority Shareholder Stake?

UNgel, a KOSPI-listed company, exchanged treasury shares with Iruon, a KOSDAQ-listed company. Amid recent rumors of a management dispute at UNgel, the market is analyzing that the company may have proactively converted its treasury shares into friendly stakes.

According to the Financial Supervisory Service's electronic disclosure system on the 20th, UNgel announced on the 17th that it would transfer 237,769 shares (1.8%) of its treasury stock to Iruon. The price per share was 5,155 KRW, totaling approximately 1.2 billion KRW. On the same day, Iruon also transferred 838,942 shares (3.0%) of its treasury stock to UNgel at 1,461 KRW per share, also totaling 1.2 billion KRW. The two companies exchanged their treasury shares.

UNgel stated that the treasury share exchange was for a strategic partnership to cooperate on new business with Iruon. The intention is to discover new business opportunities by combining UNgel's 5G billing and messaging solution technologies with Iruon's 5G subscriber and rule policy management-based solutions.

Through this treasury share exchange, UNgel can secure not only new business cooperation but also friendly stakes. Although treasury shares do not have voting rights, if transferred to third parties, voting rights can be exercised.

Recently, rumors of a management dispute at UNgel have spread in the market. This is because a corporation disclosed that it had purchased more than 5% of UNgel shares on the market earlier last month, while UNgel's largest shareholder's stake remains low.

As of the end of the third quarter this year, UNgel's largest shareholder is Vice Chairman Park Jihyang, holding 4.63%. Including related parties such as CEO Yoo Ji-won (2.87%), executives, and the UNgel Employee Welfare Fund (6.21%), the total amounts to approximately 15.61%.

The entity that purchased UNgel shares on the market is a corporation called ‘The One MTS’. The One MTS first disclosed on the 7th of last month that it had purchased 826,760 shares (6.27%) of UNgel on the market. Then, on the 10th, it announced an additional purchase of 198,147 shares (1.5%) through its related company ‘Wiz & Company’.

The total shares they hold amount to 7.78%. This is 1.62 percentage points less than the largest shareholder's stake of 9.4%, excluding the UNgel Employee Welfare Fund shares. The gap could be closed if The One MTS purchases more UNgel shares worth about 1.2 billion KRW at the current stock price.

If the 1.8% UNgel shares received by Iruon are used to support UNgel's current management, it could be a significant advantage. Additionally, UNgel contributed 170,000 treasury shares (1.29%) to the UNgel Employee Welfare Fund the day before. Moreover, it still holds 833,801 treasury shares (6.3%), leaving room for further utilization in the future.

An official from the financial investment industry commented, “Although the corporation that purchased UNgel shares on the market disclosed it was for simple investment purposes rather than management participation, it is unclear what their intention is. However, from the largest shareholder's perspective, it is a burdensome stake.”