SNT Holdings: "Investment in Smac Limited Until Accounting and Governance Trust Restored"

Capital Reduction of Over 70 Billion Won, Complex Structural Risks Emerge

"Formation of Union to Defend Management Control May Affect Investment Decisions"

On March 19, SNT Holdings stated at a meeting with minority shareholders of Smac that it is maintaining a cautious approach to investment, outlining its stance on major issues related to finance, governance, and the acquisition of WIA Machine Tools. The company emphasized that investment in Smac would inevitably remain limited until trust in overall accounting practices is restored.

SNT Holdings pointed out that Smac is expected to turn to a deficit in 2025, forecasting a decrease of 47.7 billion won in revenue, a decrease of 41.8 billion won in operating profit, and a decrease of 43.1 billion won in net profit. The company explained that the operating loss of 17.9 billion won and net loss of 21.3 billion won cannot simply be attributed to market conditions.

SNT Holdings also raised concerns about the scale of capital reduction. Total equity decreased by 78.7 billion won from 173.6 billion won in the third quarter of 2025 to 94.9 billion won at the end of the year. The company argued that, despite capital inflows from a paid-in capital increase and treasury share disposal, there was an additional structure causing further capital reduction. It pointed out that the company has not sufficiently explained the specific reasons and accounting basis for this.

Regarding the reduction of capital reserves and dividend payout, SNT Holdings explained that out of 30 billion won, only 16.4 billion won, excluding a retained deficit of 13.6 billion won, can be used as a tax-exempt resource. The company views this as a possible measure to defend management control. It also added that considering the acquisition cost of WIA Machine Tools and the loss from the disposal of treasury shares, the timing of the dividend is not appropriate.

On the structure of the WIA Machine Tools acquisition, SNT Holdings claimed that, in effect, a private equity fund would secure management control, while the burden of losses could be concentrated on Smac. While the Rilson side secured 65.2% of the shares and a majority on the board of directors, Smac was expected to bear the obligation of providing a guaranteed high-yield preferred return.

SNT Holdings pointed out that if the capital reduction of approximately 74.6 billion won in the fourth quarter of 2025 is linked to this structure, it could be an issue of burden shifting. The company explained that the acquisition deal was originally designed on the premise of an IPO, but with the likelihood of realization reduced due to dual listing regulations, profits could go to the investors while losses could be attributed to Smac.

Accordingly, SNT Holdings has not made any additional share purchases since November last year, citing unresolved questions regarding accounting, internal transactions, and disposal of treasury shares. The company stated that it requested an audit of accounting books and filed for an injunction to secure related materials, but has not received sufficient documentation.

Additionally, SNT Holdings raised suspicions about potential losses incurred during the disposal of treasury shares, internal transactions, and overseas subsidiary assets. The company emphasized that these issues are directly related to the reliability of financial statements.

SNT Holdings stated, "With key information not sufficiently provided, additional investment is inevitably limited." The company added that a comprehensive management review, validation of contract structures, and confirmation of proper accounting practices are necessary.

Regarding the labor-management council's opposition to management control, SNT Holdings argued that while the voluntary establishment of a labor union poses no problem, using it as a tool to defend management control could affect investment decisions.

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