LS Cable Files Countersuit Against Keystone Partners Over Put Option Lawsuit

Principled Response to Unfounded and Excessive Profit Demands

LS Cable announced on the 23rd that it has filed a countersuit regarding the put option (put option right) enforcement lawsuit raised by private equity fund Keystone Partners over LS EV Korea (LSEVK), in order to clarify the rights and obligations under the investment agreement.

This countersuit seeks confirmation that LS Cable bears no responsibility for the failed listing of LSEVK during the process of attracting investment and pursuing an initial public offering, and, consequently, that there is no obligation to fulfill the put option. According to LS Cable, Keystone Partners has been investing in LS Cable's electric vehicle parts business since 2020 and holds a 16% stake in LSEVK. The investment agreement includes obligations to cooperate with the listing process, a put option (IRR 15%) that can be exercised under limited circumstances if the listing fails, and a right of first negotiation for LS Cable (IRR 4%) in response to Keystone Partners' tag-along rights.

LS Tower exterior view in Anyang, Gyeonggi Province. LS Cable

LSEVK aimed to go public on KOSDAQ in September 2024 and underwent a preliminary review. However, the listing process was halted after the application was rejected because Keystone Partners failed to fulfill its mandatory holding commitment during the review. In October this year, Keystone Partners filed a lawsuit against LS Cable seeking enforcement of the put option, amounting to approximately 7.59 billion KRW (applying an annual compound interest rate of 15% to the principal investment of 4 billion KRW). However, LS Cable maintains that the conditions for exercising the put option have not been met.

Regarding the countersuit, an LS Cable representative explained, "Although the expected public offering price did not meet the criteria for a qualified listing, LS Cable proceeded with the listing at Keystone Partners' request, so there was no willful misconduct or gross negligence on our part." The representative further stated, "The responsibility for the failed listing lies with Keystone Partners, as they did not fulfill their mandatory holding commitment."

Additionally, LS Cable stated that it exercised its right of first negotiation earlier this month, applying an IRR of 4% for a transaction amount of 4.89 billion KRW, and since Keystone Partners accepted this, the share purchase agreement for Keystone Partners' stake in LSEVK has been completed. Therefore, LS Cable holds that there is no obligation to pay the put option for those shares.

LS Cable emphasized that, despite the responsibility for the failed listing lying with the investor, demanding excessive returns without legal grounds places a significant burden on corporate value and governance, and the company will respond in principle to such actions.