LS Cable Files Countersuit Against Keystone Partners Over Put Option Lawsuit

Principled Response to Unfounded Demands for Excessive Returns

Taihan Cable announced on December 23 that it has filed a countersuit regarding the put option (put option right) execution lawsuit brought 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 Taihan Cable bears no responsibility for the failure of LSEVK's listing during the capital raising and listing process, and therefore has no obligation for the put option. According to Taihan Cable, Keystone Partners has been investing in Taihan Cable's electric vehicle parts business since 2020 and currently holds a 16% stake in LSEVK. The investment agreement includes an obligation to cooperate in the listing process, a put option (IRR 15%) that can be exercised only in limited circumstances if the listing fails, and a right of first negotiation for Taihan Cable (IRR 4%) to counter Keystone Partners’ tag-along right.

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

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

A Taihan Cable representative commented on the countersuit, stating, "Despite the expected public offering price not meeting the qualified listing standards, we proceeded with the listing at the request of Keystone Partners, so there was no willful misconduct or gross negligence on our part." The representative added, "Responsibility for the failed listing lies with Keystone Partners for not fulfilling the mandatory holding commitment."

Furthermore, Taihan Cable stated that it exercised its right of first negotiation earlier this month, applying a 4% IRR for a transaction worth 4.89 billion KRW. As Keystone Partners accepted this, the sales contract for Keystone Partners’ LSEVK shares has been completed, and thus, there is no obligation to pay the put option for those shares.

Taihan Cable emphasized that, although the responsibility for the failed listing lies with the investor, demanding excessive profits without legal basis imposes a significant burden on corporate value and governance, and the company intends to respond in accordance with principle.