It has been revealed that some of the equity held by the brand refactoring side, which supports Lee Yang-gu, the new largest shareholder and second-generation owner of Dong Sung Bio Pharm, was disposed of through forced selling. They are engaged in a management rights dispute with the current management of the company.
According to the financial investment industry on the 25th, circumstances were detected on the 24th that some of the Dong Sung Bio Pharm shares held by the brand refactoring side were disposed of through forced selling. According to the exchange, the volume sold that day by other corporations was 1,245,428 shares, accounting for 4.77% of Dong Sung Bio Pharm's listed shares. As the stock price of Dong Sung Bio Pharm, which resumed trading after 32 trading days, plummeted, some of the stocks provided as collateral for borrowing funds were reportedly disposed of through Kyobo Securities.
Forced selling refers to the securities company disposing of stocks provided as collateral arbitrarily. When an investor buys stocks with borrowed money using stocks as collateral and the stock price falls, the collateral ratio decreases. At this time, the securities company requests additional funds to maintain the collateral ratio. If the investor fails to comply, the securities company forcibly liquidates the stocks to recover the loan.
Brand Refactoring purchased shares of the company held by Chairman Lee Yang-gu on two occasions from April 21 to 22. The purchase price was 3,256 won per share, and the equity reported by Brand Refactoring is 10.80%. Brand Refactoring is an unlisted company led by Baek Seo-hyun, the representative of Celestla, which is facing delisting.
At that time, Chairman Lee Yang-gu claimed that he would regain management rights while criticizing his nephew, CEO Na Won-kyun, asserting that the friendly equity, including Brand Refactoring, reached 30%. This later escalated into a management rights dispute, causing the stock price of Dong Sung Bio Pharm to rise.
However, when the company, which was experiencing management difficulties, unexpectedly applied for rehabilitation to the court as a measure to defend management rights, the stock price fell to the maximum price limit of 2,780 won on May 7. Trading was suspended the following day on the 8th. Subsequently, the court accepted the company's application for the commencement of the rehabilitation procedure, and transactions resumed on the 24th of this month.
After trading resumed that day, the stock price of Dong Sung Bio Pharm fell further to around 1,400 won. Although trading, which had been suspended for nearly two months, was lifted, the stock price plummeted further, prompting forced selling. As the volume surged, the stock price headed straight for the lower limit.
Brand Refactoring publicly stated that the cash held by the company was the necessary funds for the stock acquisition at the time of buying Chairman Lee Yang-gu's shares. However, according to industry insiders, some of the shares held by Brand Refactoring or parties in agreement with the company have been secured as collateral.
In this regard, Dong Sung Bio Pharm stated, "There is nothing new to be publicly disclosed regarding the change in the largest shareholder's equity."
Meanwhile, on the 24th, when trading resumed, it was suspended again. Chairman Lee Yang-gu and Brand Refactoring have accused the current management, including CEO Na, of embezzlement and breach of trust, prompting the Korea Exchange to require a public inquiry. They claim that Chairman Lee and others embezzled 17.7 billion won of company funds by providing advance payments or loans to major business partners from last October through May.
The company responded, "We have received the accusation, but the accusations by the accuser are baseless," adding, "We plan to actively respond through legal procedures."