San-eun vs Ebest New Officer, Can Final Adjustment Be Made in the ‘WCP CB Dispute’?

[Asia Economy= Reporter Lim Jeong-su] The extreme confrontation between the Korea Development Bank (KDB) and Ebest-BEV New Technology Association (Ebest Association) over the trading of WCP convertible bonds (CB) has shifted to a negotiation phase. Attention is focused on whether the parties can avoid litigation and reach a last-minute agreement amid intense disputes.

According to the investment banking (IB) industry on the 10th, the Ebest Association has entered negotiations with KDB regarding the WCP CB trading contract. An industry insider stated, "If the dispute proceeds to litigation, it will inevitably be prolonged, and the damages to WCP as well as all stakeholders could increase significantly. Therefore, we decided to derive a possible negotiation plan."

This marks a somewhat different atmosphere compared to the extreme confrontation between the two sides until last weekend. The Ebest Association stated in a weekend press release, "Although the Kiwoom Capital Association had not raised all the funds to acquire the CB by the exercise deadline of the preemptive purchase right on the 29th of last month, Kiwoom did not cancel the exercise of the preemptive purchase right or terminate the contract," adding, "This appears to be an attempt to designate a shell association without payment capability to exercise the preemptive purchase right for other purposes, and Kiwoom's proxy exercise of the preemptive purchase right should be withdrawn."

In response, KDB explained, "The transaction for the exercise of the preemptive purchase right to buy WCP CB with Kiwoom Capital Association has already been concluded," and "The claim that Kiwoom Capital Association failed to raise all funds within the deadline is not true." They also stated, "Kiwoom Capital, KDB's counterparty, notified the Ebest Association of the contract termination as of the 5th."

Due to the clear differences in positions, this dispute has developed into an unavoidable lawsuit between KDB and the Ebest Association. Furthermore, as Kiwoom Capital proceeded with exercising the WCP CB preemptive purchase right, the possibility of adjusting interests such as joint CB purchases between Kiwoom Capital Association and Ebest Association has diminished. Kiwoom Capital recently announced that it formed an association and completed the transaction to exercise the WCP CB preemptive purchase right.

The Ebest Association pointed out that "KDB hastily tried to sell WCP CB before No & Partners and entered into a sales contract without clearly informing the possibility of a third party exercising the preemptive purchase right, resulting in a double contract," attributing the problem to KDB's operational mistake.

An association official said, "Although the original contract includes WCP's preemptive purchase right, it does not state that a third party can exercise the preemptive purchase right on its behalf," adding, "It is possible to speculate that No & Partners, concerned that selling WCP CB at a relatively low price would make it difficult to sell CB at a higher price, colluded with Kiwoom Capital to exercise the preemptive purchase right on behalf of WCP."

The official further stated, "When No & Partners announced they would sell the CB, KDB put the CB it held in the fund up for auction and concluded an acquisition contract during the sale process," and argued, "Since the CB acquisition was decided through bidding competition with three to four parties, the right to purchase CB should belong to us (Ebest Association)."

No & Partners, led by CEO Noh Gwang-geun, a former KDB official, has evaluated WCP's corporate value at around 2.5 trillion KRW and is promoting the sale of CB that would result in a 32% stake after conversion. During the process where KDB, which jointly acquired WCP CB, evaluated WCP at 1.4 trillion KRW and sold the CB before No & Partners, controversies over the preemptive purchase right and double contracts arose.

An IB industry insider said, "Since Kiwoom Capital Association also gathered investors to exercise the preemptive purchase right, the interests are complicated, making smooth resolution difficult," but added, "Considering that litigation could jeopardize WCP's initial public offering (IPO) and cause damage to the parties involved, it seems they have opened the possibility and entered negotiations."

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