[At the Crossroads] Amridge ① A Suspicious M&A: Management Rights Transferred Without Premium

Bokyung Housing Construction to Acquire Management Control After 5 Billion Won Capital Injection
Unusual "No Premium" Deal as Shares Issued Below Market Price

The largest shareholder of Amridge, a KOSDAQ-listed company, is transferring management rights to Bokyung Housing Construction, a corporation participating in a paid-in capital increase. Bokyung Housing Construction will acquire Amridge shares at a price below market value and secure management rights in the process.

However, since there has been no disclosure of any contract involving a management rights premium between the parties, market anxiety is mounting. The absence of a management rights premium could be interpreted as an indication of undisclosed internal issues within the company.

According to the Financial Supervisory Service's electronic disclosure system on August 26, Amridge's largest shareholder, Lux Hoover, LLC., signed a management rights transfer agreement with Bokyung Housing Construction on August 22. Under this agreement, Bokyung Housing Construction will acquire management rights by paying 5 billion won to Amridge through a third-party allocation paid-in capital increase scheduled for September 8.

Previously, Amridge had been pursuing a third-party allocation paid-in capital increase since April. However, as the subscribers kept changing and the payment dates were delayed, the company has amended its filings nine times so far. Bokyung Housing Construction has now decided to provide the funding for this capital increase.

Once the capital increase is paid in, Bokyung Housing Construction will acquire 5,117,707 shares of Amridge, representing a 10% stake. The current largest shareholder, Lux Hoover, holds 6,859,477 shares, or 14.9%. Even after the capital increase, the largest shareholder will not change.

The paid-in capital increase price per share for Bokyung Housing Construction is 977 won. On the day the management rights transfer agreement was signed, Amridge's closing price was 1,086 won. This means Bokyung Housing Construction will acquire its stake at a roughly 10% discount to the market price, while also securing management rights.

Amridge has also resolved to hold an extraordinary general meeting of shareholders on September 8 to facilitate the transfer of management rights. Once the capital increase is paid in, Lux Hoover will delegate its voting rights to a person designated by Bokyung Housing Construction, and the current directors and auditors plan to resign.

Established in 2021, Bokyung Housing Construction is a construction company headquartered in Daegu. Its main business areas include residential construction, real estate sales agency, real estate development, and real estate trading. As of last year, its total assets stood at 7.4 billion won, with total equity of 6.9 billion won. The company reported zero sales and posted a net profit of 74 million won.

The 100% owner and largest shareholder of Bokyung Housing Construction is CEO Kim Heejun. Born in 1993, Kim previously served as a team leader at DK Korea in 2017, worked at Bokyung Window Metal in 2019, and became CEO of Junindeco in 2021. He has now been nominated as a new director candidate at Amridge's upcoming extraordinary shareholders' meeting.

Meanwhile, Amridge was previously known as "New Pride" and experienced sharp price swings on the KOSDAQ as a theme stock. The company claimed to be involved in the Chinese duty-free shop business and Hallyu-related ventures, leading to roller-coaster stock movements, but ultimately trading was suspended in March 2020 after a disclaimer of opinion from its auditor. Trading only resumed in September 2022 after capital reductions and fundraising efforts.

Currently, the company is engaged in clothing distribution and cannabis businesses. Last year, on a consolidated basis, it posted sales of 19 billion won, an operating loss of 11.5 billion won, and a net loss of 16 billion won. In 2023, it recorded a net loss of 35.5 billion won, and in the first quarter of this year, it posted a net loss of 3.3 billion won, continuing its deficit for more than two years.