This article was published on the ChosunBiz MoneyMove (MM) site at 4:45 p.m. on Jan. 20, 2026.
Electronics parts corporation KEM Tech, despite weak finances, proceeded with a 30 billion won real estate purchase and ultimately turned to shareholders for help. During payment of the deposit and interim payment, the company used only 100 million won of its own funds and appeared to plan to cover the remaining balance with shareholders' money.
On the 20th, investment banking industry sources said KEM Tech signed a contract last May to buy a building in Magok with a 30 billion won investment. The building had been owned by karaoke equipment company Entermedia, and KEM Tech plans to buy the entire land and building to use it for secondary battery parts development and as a strategic research hub.
KEM Tech is controlled by HS Holdings, the personal company of Yusung-jun, the CEO of Daejin Advanced Materials. Its main business is manufacturing infrared (IR) filters for smartphone camera components, but after announcing last year that it would enter the secondary battery parts manufacturing business, it unexpectedly spent a large sum to acquire a building.
KEM Tech executed only 100 million won of company funds when closing the contract. Of the 30 billion won building price, a total of 5 billion won was covered by issuing convertible bonds (CBs). The entire 3 billion won deposit and 2 billion won of the 2.1 billion won interim payment were paid with CBs, and only 100 million won of the interim payment was paid in cash. The remaining 24.9 billion won is scheduled to be paid in January next year.
Given KEM Tech's financial situation, it is currently unable to pay the remaining balance. As of the third quarter of last year, KEM Tech's cash equivalents amounted to only 1.6 billion won. Even if all liquid assets that can be monetized are added together, they total only 17.2 billion won.
Looking at the financial structure, it is not a situation in which the company should be buying a building. Continued losses and pressure from liabilities have been mounting. As of the third quarter of last year, cumulative deficits reached 60 billion won. The net debt ratio also surged about threefold in one year. That is because the company failed to make money from its business and survived by repeatedly raising funds through paid-in capital increases and convertible bonds. The outstanding balance of issued convertible bonds currently amounts to about 20 billion won.
It appears the company plans to pay the remaining balance with funds raised through a paid-in capital increase. The company said the purpose of the capital increase was securing operating funds and funds for debt repayment, but because the funds to be raised by the capital increase are about 25 billion won—roughly the same as the remaining balance to be paid—IB industry sources say it should be viewed as being pushed forward for the purpose of paying the remaining balance. However, if the stock price falls because of the capital increase, the funds raised could be somewhat reduced. The planned issue price is currently 2,875 won.
Shareholder dissatisfaction is high because the value of existing shareholders' stock fell sharply during the paid-in capital increase process. On the 16th, KEM Tech announced a stock split that divides each existing share into two and a reverse split that combines 10 shares into one. Shareholders are suffering heavy damage from the capital increase alone, and the reverse split has added a second burden.
An industry official said, "It seems clear the purpose of the capital increase is not investment to restore business performance but payment of the real estate balance," and added, "Shareholders expect the Financial Supervisory Service to put KEM Tech's capital increase under review and examine it closely."