KT subsidiary Millie's library has significantly strengthened its general meeting regulations. Shareholders attending the meeting can only speak once on each agenda item, and their speaking time is limited to 5 minutes. Millie's library announced that it established specific regulations to limit shareholders' speaking rights and approved a change to its articles of incorporation to remove the concentrated voting proposal at its regular shareholders' meeting held on the 31st of last month.
Criticism has emerged in the industry suggesting that this may be a preparatory measure to limit the voices of small shareholders of Millie's library, who have been increasingly vocal recently. Furthermore, there are speculations that Millie's library will soon embark on a merger and acquisition (M&A) of affiliates. This raised suspicions that the amendment to the articles of incorporation is a response to growing shareholder backlash.
According to the Financial Supervisory Service's electronic disclosure system on the 1st, Millie's library announced that it changed its name to 'KT Millie's library' during the shareholders' meeting held the day before, and that it put six agenda items to a vote, including an amendment to its articles of incorporation to add 'copyright agency and brokerage' to its business objectives.
What particularly drew attention at the shareholders' meeting the day before was the 'revision of the general meeting operating regulations.' This involves making large-scale modifications to about 50 regulations related to the meeting. The company explained that the limitation on shareholders' speaking rights was necessary for the smooth conduct of the meeting, but criticism arose that the revision only reflects the company's unilateral position.
One shareholder pointed out, 'If limits are placed on the number of times or duration of speaking, doesn't that restrict the rightful exercise of shareholder voting rights?' A representative from Millie's library noted, 'While this content was included as it aligns with the standard operating regulations for the general meetings of KOSDAQ-listed companies, the actual operation is intended to be flexible.'
The industry views the changes to the regulations for this shareholders' meeting as related to Millie's library having previously received shareholder proposals.
Seoul Asset Management, a domestic asset management company, submitted a shareholder proposal regarding stock buybacks and cancellations to Millie's library in February this year. At that time, Millie's library stated it would 'review various methods for realization,' but the proposal was not included in the agenda for this shareholders' meeting.
The company later explained that it agreed with Seoul Asset Management on the significance of focusing on growth and expansion, and subsequently withdrew the shareholder proposal. However, they have been unable to reach a consensus with the manager who led the proposal, as well as small shareholders. The manager is reported to have departed from Seoul Asset Management in early March.
Park Hyun-jin, CEO of Millie's library, stated, 'We are preparing investments for new business expansion, and we will provide specific details in the first half of the year,' indicating that considerations of shareholder returns would follow that. Millie's library had filled a 88.5 billion won deficit since its listing in 2023 and was in a situation to generate distributable profits. While expectations were high for the introduction of shareholder return measures such as dividends, these have been postponed due to the reasoning of expanding new businesses.
Some claim that Millie's library is preparing to acquire its affiliate Storywiz. Storywiz, an operator of a web novel platform, is a wholly-owned subsidiary of KT Studio Genie, which is the largest shareholder of Millie's library's largest shareholder, GENIE MUSIC.
Millie's library has previously stated that it plans to expand its webtoon and web novel business when conducting an initial public offering (IPO). At that time, the company said, 'If the web novel and webtoon business, which can be utilized as secondary content such as movies, grows, the synergy with KT Group's media business will also increase.'
On the day that Storywiz received an announcement about new business investments from CEO Park, it borrowed 3.7 billion won from its parent company in the form of short-term borrowings. The repayment date is set for September 30. Typically, short-term borrowings are often set for a duration of one year, but by setting the repayment period short to about six months, they likely assessed that they would have sufficient ability to repay the funds later. This has led to predictions that the completion of the merger and acquisition will be considered by the third quarter after pushing for it in the first half.
Additionally, KT is seeking to divest or merge from its media, content, and hotel businesses in order to focus on its core telecommunications and artificial intelligence (AI) operations. Last month, KT also sold a 23.46% stake in digital advertising agency PlayD to SOOP (formerly AfreecaTV).
Storywiz has been a company that has recorded annual losses since its spin-off in 2021. Last year, both operating loss and net loss amounted to 3.6 billion won, which expanded compared to the previous year (operating loss of 3 billion won, net loss of 1.8 billion won). Shareholders of Millie's library are now concerned that a profitable company may incur losses in the process of acquiring a loss-making company during the KT affiliate restructuring.
Millie's library responded regarding the acquisition of Storywiz, saying, 'There is nothing we can confirm.'