Crowdworks Chairman Park Minwoo to Participate with Only 1 Billion KRW in 34 Billion KRW Capital Increase (Part 2) [Securities Registration Report Analysis]

Only 1 Billion KRW Invested Out of 6 Billion KRW Allotted
Chairman Park's Stake to Drop to 13% After Capital Increase

In the paid-in capital increase of Crowdworks, which amounts to 34 billion KRW, Chairman Park Minwoo, the largest shareholder, plans to participate with only 1 billion KRW of his allotted shares. For reference, the amount allocated to Chairman Park is 6 billion KRW. As a result, the largest shareholder's stake, which was in the 17% range, will decrease to about 13%.

The company's actions after the capital increase will be even more important. Since a large amount of capital is being invested in business expansion, performance will also become more critical. Crowdworks has failed to meet the performance estimates it presented at the time of its SPAC merger. As the company is currently recording losses, it is expected that performance improvement will be necessary.

◆ Chairman Park Minwoo, the largest shareholder... Participating with only 1 billion KRW out of 6 billion KRW allotted

Crowdworks currently has a total of 9,307,914 shares. The new shares to be issued this time represent a large volume, equivalent to about 46.15% of the total shares. Share dilution is therefore inevitable.

Chairman Park, the largest shareholder, plans to participate with only 124,688 shares (worth 1 billion KRW), which is 16.7% of his allotted 748,478 new shares.

As a result, Chairman Park's stake will decrease from 17.41% to 12.83% after the capital increase. This could become a burden when raising funds again in the future. In addition, despite the large-scale capital increase, the fact that he is participating with only 1 billion KRW may raise doubts among investors about his commitment to responsible management.

Currently, Crowdworks is experiencing a growing gap between its actual performance and the estimates it announced at the time of its listing. The initial estimates were 24.667 billion KRW in revenue and 3.812 billion KRW in operating profit for 2023, and 36.23 billion KRW in revenue and 9.6 billion KRW in operating profit for 2024.

◆ Continued underperformance due to failure to meet estimates

However, revenue recorded in 2023 was 23.978 billion KRW, and last year it plummeted to 12.013 billion KRW. The company also failed to turn a profit, with operating losses increasing from 1.785 billion KRW in 2023 to 11.726 billion KRW last year.

In the first quarter of this year, revenue was 1.899 billion KRW, a 28.48% decrease compared to the same period last year. Operating loss slightly decreased from 3.034 billion KRW in the first quarter of last year to 2.772 billion KRW in the first quarter of this year. For reference, this year's performance estimates are 45.384 billion KRW in revenue and 15.467 billion KRW in operating profit.

In its securities registration statement, the company explained, "We aim to promote the company's sustainable growth and to establish a foundation for more active business expansion and operations in the future," adding, "The paid-in capital increase is an essential measure to lay the groundwork for future business growth."

When asked about the largest shareholder's subscription, marketing expenses, and the timing of the capital increase, Crowdworks did not provide a response. Instead, a company representative explained, "External communication during the capital increase period is very sensitive," and added, "We will respond only through official disclosures."