This article was published on Dec. 13, 2024, at 5:25 p.m. on the ChosunBiz MoneyMove (MM) site.
The information and communications equipment corporation Davolink has drawn attention for attempting to boost its stock price by repeatedly joining theme stocks. Davolink is under suspicion of trying to collaborate with the side of Min Hee-jin, former CEO of Adore, after a conflict with HYBE from August to November while allegedly spreading rumors to raise its stock price.
Following that, Davolink attempted to transition into a secondary battery company and sell the company but soon failed, then sought to recruit individuals affiliated with Lee Jae-myung, leader of the Democratic Party, attempting a transition into a political theme stock. There are claims that the parent company, TerraScience, is raising Davolink's stock price to sell it at a high valuation. There are also rumors of other entities being involved, separate from TerraScience.
On the 13th, according to the financial investment industry, Davolink, whose stock price had fluctuated sharply due to its proximity to former CEO Min Hee-jin, saw its stock price volatile with news that it will recruit a close aide of Lee Jae-myung as an outside director. Davolink plans to appoint Baek Jong-seon, who previously served as Lee Jae-myung's personal secretary, as an outside director, as stated in a public disclosure made on the 10th. Baek served as an auditor at PNCae after going through the administrative support department of Seongnam City Hall.
Recently, as the theme stocks related to Representative Lee Jae-myung have shown strength during the impeachment political climate, Davolink's stock soared. Within two days, on Dec. 10 and 11, following the news, Davolink's stock price rose by 28.1% based on closing prices. Notably, on the 11th, it surged to 2,355 won, nearing the price limit of 2,360 won.
However, upon closer examination, it has been pointed out that Baek is not easily regarded as a close aide to Representative Lee. He has caused various controversies, including cursing and threatening individuals who criticized Lee around the time he served as the mayor of Seongnam. Subsequently, Representative Lee noted, "Baek has no relationship with the representative at present. It is quite awkward." Baek also said, "Due to my past mistakes, I have been unable to contact the representative, causing him great distress."
A source within the capital markets noted, "I heard that there’s considerable effort from KOSDAQ corporations seeking to recruit individuals who have experience working with Representative Lee in Seongnam City Hall and Gyeonggi Province," adding, "However, if they truly are close aides of Representative Lee, wouldn't they be cautious in this current climate?"
Aside from Davolink, MicobioMed recently recruited Jeong Hyun-cheol, who worked with Representative Lee, as an outside director on the 4th, which led to a surge in stock price.
Davolink is an information and communications equipment corporation that develops wireless routers (AP). According to publicly available information about the listed corporation Davolink, it was established in 2019; however, this is because Davolink was listed through a merger with a Special Purpose Acquisition Company (SPAC), with the actual establishment dating back to 2000. Last year's figures showed a revenue of 75.3 billion won and an operating loss of 900 million won.
Davolink gained attention when, on the 5th of last month, former CEO Min stated, "There are rumors circulating in the investment community that I have either secured investments from someone or entered into a contract. These are baseless rumors."
The company mentioned by former CEO Min is indeed Davolink. On Oct. 2, Davolink disclosed that it appointed Lee Mo, the uncle of NewJeans member Hyein, as a candidate for an internal director through a correction of the resolution to convene the general meeting of shareholders.
It is estimated that Davolink began leaking rumors about recruiting former CEO Min and NewJeans from August. At that time, Davolink's stock price started to rise slowly from the 1,000 won range, reaching 3,080 won on Nov. 4 at one point. However, when former CEO Min directly stated on the 5th that it was not true, the price plummeted to the price limit. Subsequently, it is reported that Davolink abandoned all plans as the proposal for Lee Mo's director appointment was removed during the correction disclosure process on Nov. 7.
On Nov. 21, this company announced its entry into the silicon anode material business, which has garnered attention as a key material for secondary batteries. At that time, they planned to appoint Park Seong-kyu, an expert in silicon anode materials, as an internal director; however, all candidates for internal directors, including Park, voluntarily resigned. It was said that the appointments were to align with a company sale, but as the sale fell through, the internal director appointments were also rejected.
When the stock price fluctuated again, the Korea Exchange requested a public disclosure. Davolink stated, "We aimed to appoint a new board of directors and push forward new business initiatives and supply contracts through paid-in capital increases; however, as negotiations did not progress smoothly, we decided not to proceed with new business initiatives or supply contracts associated with the appointment of new directors any further."
Industry insiders believe that TerraScience, the parent company that manufactures hydraulic coupling devices, is disposing of its assets in light of the embezzlement and breach of trust controversies involving executives. Since the beginning of this year, TerraScience has attempted to sell off shares of Davolink more than a dozen times.
TerraScience saw its stock price surge due to lithium theme stocks but then plummeted and is currently in a trading halt. The current management of TerraScience is at odds with major shareholder and representative Kwon Soon-baek, along with small shareholder coalitions supporting him. They claim that TerraScience was suspended due to embezzlement and breach of trust by the current management. TerraScience is currently initiating a paid-in capital increase at an issuing price that is only one-fifth of its current stock price. (Related article☞ This company, which saw its stock price reach 7,000 won, is now offering a paid-in capital increase at 139 won per share after one year... shareholders are outraged.)