EV Advanced Materials, a battery materials company listed on the KOSDAQ market, is trying again to carry out a paid-in capital increase that is stuck in limbo, but it is expected to be difficult to clear the financial authorities' review threshold. This is because the Financial Supervisory Service is taking a hard look at the legal risks of EV Advanced Materials' owner.
According to the Financial Supervisory Service's electronic disclosure system on the 29th, EV Advanced Materials filed a revised securities registration statement on 23rd. This revision comes two months after it amended the securities registration statement four times through Jul. for the paid-in capital increase.
EV Advanced Materials appeared to have effectively abandoned the paid-in capital increase after it did not submit a securities registration statement for a little over the past two months following the FSS's correction request in Jul. However, by revising the securities registration statement again this time, it signaled its intent to relaunch the paid-in capital increase. A senior official at EV Advanced Materials was also said to have visited the FSS.
However, the industry sees a high possibility that EV Advanced Materials' renewed attempt will fail. According to an industry source, the FSS is viewing the legal risks of the company's de facto owner, Chairman On, as serious and is said to have set a policy to disallow this paid-in capital increase. The FSS does not have the authority to directly restrict the company's paid-in capital increase, but it can block the effectiveness of the securities registration statement through continued correction requests.
A person familiar with the current paid-in capital increase process said, "EV Advanced Materials recently even met directly with FSS officials but, as far as I know, did not receive any definitive answer," and added, "If approval is not obtained this time, I understand that voluntary withdrawal is the leading option."
Chairman On received a suspended prison sentence last year on embezzlement charges and is currently standing trial without detention on fraud charges.
EV Advanced Materials also stated in its first and second revised securities registration statements, "Chairman On has a history of being investigated on charges of violating the securities and exchange act and has been indicted in connection with borrowing for a real estate development project," while adding, "The borrowing case for the real estate development project arose from Chairman On's personal monetary transaction relationship."
An official in the capital markets industry said, "Several listed companies owned by Chairman On have been delisted, and he is even called 'the delisting ghost,'" and added, "Given Chairman On's record, it is impossible for the FSS to approve a paid-in capital increase."
Listed companies once controlled by Chairman On, such as SL Bionics (formerly Semicon Light) and Studio Santaclaus Entertainment, have entered delisting procedures.
ROA&Co Group, the parent company of EV Advanced Materials, also said on 15th, "With multiple correction requests from the FSS related to the paid-in capital increase, the filing procedures for the paid-in capital increase are being somewhat delayed," but added, "We accept this as a natural administrative process to strengthen disclosure and procedural transparency under the Capital Markets Act, and the company is doing its utmost."
On Apr. 4, EV Advanced Materials announced it would push a 41.4 billion won paid-in capital increase to invest in facilities and strengthen competitiveness. The number of new shares is 41.5 million, with priority allocation to existing shareholders, and any unsubscribed shares to be offered to the public. The funds raised through the paid-in capital increase were to be used for stabilizing the financial structure and expanding the Vietnam plant.