Irobotics (formerly Y Optics Manufacture) has encountered a setback in its 14 billion won third-party allocation capital increase aimed at funding new business related to robot reducers. This is because the court accepted a request for provisional injunction to prohibit the issuance of new shares filed by a minority shareholder coalition. Since the court acknowledged the minority shareholders' claim that this capital increase attempt is related to the defense of the company's management rights, the dispute is likely to enter a new phase.
According to the Financial Supervisory Service's electronic disclosure system (DART) on the 5th, Irobotics announced on the 1st that the Changwon District Court accepted the request for provisional injunction to prohibit the issuance of new shares filed against the company. Previously, Kim Jong-su and five others filed a lawsuit requesting to prohibit Irobotics from issuing new shares. As a result of the court's decision, the procedure for the third-party allocation capital increase will be halted until the ruling on the merits is finalized.
Irobotics held a board meeting on the 4th of last month and decided on a 14 billion won third-party allocation capital increase. The plan was to issue 8,951,406 new shares at 1,564 won per share to Irobotics Innovation Growth No. 1.
Irobotics stated it would use the funds raised from the capital increase to build production facilities related to robot reducers and invest in research and development (R&D). It planned to begin investments within this year.
However, the minority shareholder coalition alleged that the true purpose of the capital increase is for the current management to secure friendly equity for the defense of their management rights. This is because if Irobotics Innovation Growth No. 1 completes its payment, it will become the largest shareholder with an equity stake of 18.6%.
Irobotics has been facing a management dispute since 2023. As of July this year, the largest shareholder was Mr. Kim Young-kyu and related parties, holding an equity stake of 10.04%. They are reported to have ties with the minority shareholder coalition.
Currently, Irobotics' board of directors is dominated by K Hums. K Hums rose to the position of largest shareholder with an equity stake of 5.11% after signing a stock transfer agreement with former Irobotics CEO Yeom Hyun-kyu in March this year, but was pushed out two days later as Mr. Kim and others increased their equity stake.
The minority shareholder coalition held an extraordinary shareholders' meeting in June this year and proposed the dismissal of the current management and the appointment of new directors, but it was rejected. Although the minority shareholder coalition had an advantage in the vote, it did not meet the 'supermajority' requirement.
Under commercial law, the dismissal of executives requires a special resolution of the shareholders' meeting, needing attendance of more than one-third of the total number of issued shares and approval of more than two-thirds of the voting shares. Y Optics Manufacture has incorporated a supermajority requirement in its articles of incorporation, making the standard even higher. In the case of dismissals of directors for hostile mergers and acquisitions, more than half of the total number of issued shares and more than three-quarters of the shares present must vote in favor.
As the minority shareholder coalition and the current management have exchanged blows, there is potential for a settlement to prevent the prolonged dispute. A representative of the minority shareholder coalition noted, "If the management dispute continues, it will adversely affect the company, and as shareholders, that is not a good direction."
Also, as the third-party allocation capital increase is currently blocked, Irobotics faces the necessity of finding new funding sources for its new robot reducer business. According to its semiannual report, Irobotics had cash and cash equivalents of only 2.9 billion won as of the end of June and does not have much leeway to pursue new business.
Irobotics stated it will actively respond to the litigation according to legal procedures and will explain the direction of the new business soon. A representative from Irobotics mentioned regarding funding sources other than the capital increase, "Currently, no specific discussions have taken place, but we intend to prepare to ensure that there are no delays in the schedule," adding, "Future plans will be communicated through official channels at an appropriate time."