[Public Companies at a Crossroads] Damul Multimedia, IM CB 'Low-Price Sell-Off' Controversy②

[Asia Economy Reporter Jang Hyowon] Park Secheol, CEO of Damul Multimedia, transferred his stake in the KOSDAQ-listed company IM and simultaneously sold the convertible bonds (CB) of IM held by Damul Multimedia.

At this time, CEO Park sold his shares at about twice the market price, while the CBs held by Damul Multimedia were sold at a significantly lower price.

Capture of the I AM homepage.

CEO Park Secheol’s Shares Sold at High Price, Damul’s CBs Sold Cheaply

According to the Financial Supervisory Service’s electronic disclosure on the 24th, Damul Multimedia announced on the 22nd that it would sell 2.5 billion KRW face value of IM’s 5th series CB for a total of 3 billion KRW. The purpose of the disposal was stated as investment recovery and financial structure improvement.

The conversion price of IM’s 5th series CB is 878 KRW, making it convertible into shares at present. With a face value of 2.5 billion KRW, it can be converted into 2,847,380 shares of IM. Selling this for 3 billion KRW is equivalent to selling IM shares at 1,054 KRW per share.

The actual CB purchaser immediately exercised the conversion rights. Accordingly, new shares are scheduled to be listed on July 7.

This price is significantly lower than the market price. On the day the CB was sold, April 22, IM’s closing price was 1,525 KRW. The average closing price over the past three months was 1,773 KRW. Damul Multimedia sold the CB at a price approximately 30.9% to 40.5% lower than the market price.

Damul Multimedia’s sale of IM CB was conducted alongside the sale of IM’s controlling shares. On April 12, IM’s largest shareholder, CEO Park Secheol, signed a contract to transfer 4,696,605 shares (8.0%) of IM to Lim Ilwoo, CEO of Greenrees.

The timing of Damul Multimedia’s CB sale contract was also on the same day. The CEO of Damul Multimedia is Park Secheol. The largest shareholder is ‘Wooriro,’ whose largest shareholder ‘Infion’ is also controlled by CEO Park. The ownership structure is Park → Infion → Wooriro → Damul Multimedia. Both Damul Multimedia and IM are companies controlled by CEO Park.

When CEO Park transferred the controlling shares of IM, the price per share was 2,981 KRW. He sold his own shares at about twice the market price, while Damul Multimedia’s CBs were sold at a price lower than the market price.

An investment banking (IB) industry insider analyzed, “If a deal proceeds with such a structure, the financial investor (FI) who acquires the CB can immediately sell the shares for profit, but as a result, the stock price falls, causing losses to the party acquiring the controlling shares.”

In fact, the party that acquired IM’s controlling shares through borrowed funds lost all the shares to the secured creditor immediately after being appointed as a new director at the shareholders’ meeting.

Controlling Shares and CB Transfer Contracts Proceeded on Same Schedule... Who is the Acquirer?

Coincidentally, the contracts for IM’s controlling shares and Damul Multimedia’s IM CB transfer were executed on the same schedule. Both contracts were signed simultaneously on April 12 and later amended together on May 25.

The terms of the IM controlling shares contract initially included a down payment of 1.4 billion KRW, an interim payment of 2.8 billion KRW, and a balance of 9.8 billion KRW. The balance was divided into a second interim payment of 1 billion KRW, a third interim payment of 3 billion KRW, and a final balance of 5.8 billion KRW. The final payment deadline was changed to June 15. CEO Park requested earlier payment of the balance.

Along with this, the sale schedule of Damul Multimedia’s CB was also changed to June 15, aligning it with the IM controlling shares contract schedule.

Regarding this, a Damul Multimedia official said, “We cannot disclose who the CB purchaser is,” adding, “We sold at an appropriate price out of concern that the stock price would fall if the CB is converted into shares in the future.”

Meanwhile, after CEO Park transferred all controlling shares of IM, Wooriro sold 430,000 shares of IM stock it held on the market. This was also at an average disposal price of around 1,500 to 1,800 KRW, far below the 2,981 KRW price at which CEO Park sold his shares.

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