②Arion Faces Penalty Risk if Capital Increase Fails... Possible Listing Eligibility Review

[Asia Economy Reporter Jang Hyowon] Market attention is focused on the success or failure of Arion, a KOSDAQ-listed company, in its 25 billion KRW rights offering. Additionally, if the payment of funds fails, the company may receive penalty points from the Korea Exchange. Previously, Arion had accumulated 9 penalty points due to the withdrawal of a rights offering, and if it receives 6 more points, it will be subject to a delisting review.

◆Rights Offering Delayed for Four Years Since 2016

According to the Financial Supervisory Service’s electronic disclosure on the 3rd, Arion changed the payment date for its 25 billion KRW third-party allotment rights offering from the original February 27 to March 12. Additionally, the allottee was changed from the corporation ‘CORE TV SOLUTIONS LIMITED’ to the individual ‘RAZA MAHMOOD KHAWAJA ANSARI’.

Arion stated, “Representative RAZA requested the change of the payer from the corporation to himself,” and added, “There is no problem with the payment of the rights offering, including other allottees, as the delay is simply procedural.”

However, this is not the first delay in Arion’s rights offering. The current 25 billion KRW rights offering originally began on December 7, 2016. At that time, Arion announced a 30 billion KRW third-party allotment rights offering targeting ‘INDONESIA CBS HOLDINGS’.

But this offering was delayed 13 times thereafter, and on August 27 last year, the allottees were changed to domestic companies Euclid Investment, Kkodumaru, TCS Korea, Kim Youngbok, and Build Up. Although the allottees changed to domestic corporations and individuals, the funds were not received by the payment deadline of September 4, and Arion eventually withdrew the rights offering after about three years.

Interestingly, Arion immediately decided on the same rights offering on the day it withdrew the previous one. The amount was 25 billion KRW, and the allottees were the same.

Arion explained, “To proceed with the rights offering without issues, we withdrew the existing offering with a tight payment deadline at the investors’ request and re-decided it,” adding, “There are no changes to the shareholders’ meeting schedule or other matters related to the withdrawal and re-execution of the rights offering.”

However, this rights offering has also been delayed for five months. Not only has the payment date been delayed, but the allottees have changed except for Euclid Investment. Newly added allottees include foreign corporations Inchora Limited, RA Media AS, and individual representative RAZA.

◆Payment Deadline for Rights Offering: March 19

With repeated delays in payment for the rights offering, Arion is under pressure. If the rights offering is not completed by March 19, the company may receive penalty points from the Korea Exchange.

The Exchange imposes penalty points if a KOSDAQ-listed company delays the payment date by more than six months from the initial disclosure date related to the rights offering. This is to prevent raising market expectations for financial structure improvement through large-scale rights offering announcements and causing market confusion. If penalty points received from the Exchange exceed 15 within one year, the company becomes subject to a delisting review.

Previously, Arion was designated as an unfaithful disclosure corporation on November 4 last year and received 9 penalty points due to the cancellation of the rights offering on September 4 last year. The Exchange regarded this as a “willful serious violation” and also ordered the replacement of the disclosure officer.

If Arion fails to complete this rights offering and receives 6 or more penalty points from the Exchange, it will be subject to a delisting review.

An Arion representative said, “We are aware of the concerns regarding penalty points,” and added, “We will encourage the funds to be paid within the deadline.”

This content was produced with the assistance of AI translation services.