Delisted, but this company with a ’70 billion office building’… Announcement of Muddy Water Shareholders Aiming for Management Rights

Melfas promotes sale of company building to KORAMCO Asset Management Minority shareholders “Current management targets real estate and seizes management rights” Melfas “legitimate sale for debt relief” There are companies that are going strong. It is Melfas, a parts maker such as touch screen panels. Melfas has a shareholders’ meeting on the 31st, and a mud fight is expected. Some minority shareholders are concerned that if the articles of incorporation are changed at this shareholders’ meeting, there is a high possibility that some executives will arbitrarily exercise the company’s property rights. Melfas is promoting the sale of its office building worth 70 billion won.

According to the securities industry on the 30th, Melfas has a shareholders’ meeting on the 31st. At this general shareholders’ meeting, it is expected that resolutions regarding changes to the articles of incorporation and the appointment of directors and auditors will be made. If the articles of incorporation are amended at this general meeting of shareholders, the cancellation of treasury shares will be possible according to the resolution of the board of directors. When a company cancels its stock, it means that the stock is completely removed from the books of account. The number of shares issued decreases, and the capital stock also decreases. The retirement of treasury shares, which reduces capital, is called potato retirement.

If delisted stocks go through a paid-in capital increase after capital reduction, the largest shareholder’s stake is highly likely to increase. This is because it is rare for minority shareholders to participate in a paid-in capital increase of an already closed company. An official in the financial investment industry said, “If the management owns more than 70 percent of the company’s shares through a bequest after capital reduction, the special resolution requirements are met, and the influence of minority shareholders becomes negligible.” As of the end of June, the largest shareholder, ENS Company, and a specially related person had a 33.65% stake.

In the midst of this, Melfas is trying to sell the office building, which is one of the company’s main assets. KORAMCO Asset Management recently obtained the status of the preferred bidder for the sale of the Melfas office building. The book value of the office building is around 32.6 billion won, but the acquisition price is known to be around 70 billion won. However, the building is currently under pressure. This is because minority shareholders applied for provisional seizure to the Suwon District Court.

Over the management rights of Melfas, it is expected that the current management, the Minority Shareholders’ Alliance, and inside director Kang Jung-hoon, who was dismissed after serving as Melfas co-CEO, will clash. Director Kang said in the reference documents for proxy exercise of voting rights, “The current management is trying to unilaterally proceed with the real estate sale process,” and “I request you to join the movement to kick out the current management, who is the main culprit of the delisting.”

Regarding this, a Melfas official explained, “It is just a far-fetched claim,” and “the real estate sale was conducted legally through an open bidding, and it is being carried out to first write off debts that cause billions of deficits a year.” Regarding the possibility of pursuing안전놀이터 bequests after the cancellation of treasury stocks, he said, “Retirement of treasury stocks is done from the standpoint of returning shareholders.” I did not even draw such a picture (post-potato bequest),” he refuted.

Melfas is a company that has grown through touch screen panels, touch controller ICs, and FPCBs. It entered the KOSDAQ market in 2009, but was delisted in July. In March, when the decision to delist was made, the KRX announced that “it was decided that the delisting standard was met after comprehensively considering the continuity of the company and the transparency of management.”

Normally, delisting is considered a bad thing, but minority shareholders explain that there was nothing bad from the current management’s point of view. This is because delisting makes it easier to exercise property rights to company assets. Melfas’ stock price plummeted in the aftermath of the anti-selling in 2021, and the owner of the company disappeared. After that, a fight broke out for control of the company. Various powers each held an extraordinary shareholders’ meeting and resolved the agenda, while each other filed a lawsuit claiming that the other party’s shareholders’ meeting was invalid.

At the end of last year, ENS Company, which participated in capital increase by Melfas to normalize management and improve financial structure, became the largest shareholder, and the situation came to an end. In January, Melfas bought and merged with Giant Media, a media company, for 11.5 billion won. However, because the company was in the media industry unrelated to the existing business and the business was illegal, its corporate value was not recognized. Eventually, Melfas was delisted, and minority shareholders are raising suspicion that the company did not do its best to maintain the listing during the delisting process.

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