SM Entertainment, “I don’t know the details” on Lee Soo-man legal response notice.
SM Entertainment (hereinafter referred to as SM Entertainment) announced a response plan to Lee Soo-man, the founder and largest shareholder, to the legal response to Kakao’s acquisition of a stake in SM, saying, “We will review it after being aware of the details.”
SM told E-Daily on the 8th, “We want to create synergy and enhance K-Culture’s global status through multilateral business cooperation related to music, records, and other contents using Kakao’s capabilities. We signed a business partnership contract, paid-in capital increase, and bond issuance contract.”
Regarding the former general producer Lee’s announcement that he will file an injunction to ban the issuance of new shares and convertible bonds, he said, “I heard related information through an article. “We don’t know any more details,” he said. “If we receive an application for provisional disposition or recognize the details in the future, we will review them.”
SM emphasized, “The signing of the contract with Kakao is to promote multilateral business cooperation and synergy creation, and is not a priority on the specific and individual interests of individual shareholders.” In addition, he said, “There seems to be a misunderstanding from the outside about ‘SM 3.0’ and the multi-production system, but we will resolve it through rational communication.”
Earlier, SM distributed a statement the previous day and said, “We decided to form strategic partnerships with Kakao and Kakao Entertainment in various fields, signed a business cooperation contract between the three parties, and signed a contract with Kakao to acquire new shares and convertible bonds.”
SM announced in a public announcement that it will issue 1.23 million new shares of common stock to Kakao at 91,000 won per share (the closing price on February 3) and raise 111.9 billion won, along with 105.2 billion won (92,300 won per share). Through this conversion of convertible bonds, Kakao will be able to secure an additional 1.14 million shares of SM common stock, and after the conversion, it will become SM’s second-largest shareholder with a 9.05 percent stake in SM.
Co-CEOs of SM Lee Sung-soo and Tak Young-joon recently unveiled a blueprint for ‘SM 3.0’, which aims to switch from Lee Soo-man’s one-man production system to a multi-production system. The two said, “We expect to secure a strong growth engine to develop into a leading global entertainment company through a strategic partnership with Kakao.”
Meanwhile, former executive producer Lee protested the decision through his legal representative Hwawoo, saying, “It is illegal to issue new shares or convertible bonds to a third party to change management’s influence on management rights or control in a company dispute.”
“We will fundamentally block SM board’s illegal attempts through an injunction banning the issuance of illegal new shares and convertible bonds, and we will hold all civil and criminal liability for directors who approve the illegal resolution,” Lee said.