Autech, a company specializing in special-purpose vehicles, has once again moved to inject a large amount of capital to improve the financial structure of its subsidiary CRK, whose debt-to-equity ratio reaches 9,700%. The step is meant to normalize management at the subsidiary, but the market is focusing on the potential increase in the parent company's financial burden and the possibility of shareholder equity dilution. In response, EcoLead, the No. 2 shareholder, is calling for securing board independence and strengthening shareholder return policies ahead of the shareholders meeting on the 27th.
The company said it was an "inevitable choice for a mid- to long-term leap," adding, "With the funds secured this time, we will improve the financial structure, lift fundamental profitability, and seek multifaceted shareholder return policies."
According to the Financial Supervisory Service's electronic disclosure system on the 20th, Autech, listed on KOSDAQ, participated in a paid-in capital increase of its unlisted subsidiary CRK on the 5th, acquiring 3,103,200 shares (10.99% equity stake) for 15.516 billion won. With this investment, Autech came to hold 86.1% equity in CRK.
The investment is a step to improve CRK's financial structure. As of 2025, CRK's total liabilities are 125.9 billion won and total capital is 1.3 billion won, putting its debt ratio at 9,700%. Generally, when the debt ratio exceeds 200%, the financial burden is considered heavy. Profitability also worsened. The net loss, which was 1.1 billion won in 2024, widened to 19.8 billion won last year.
The funds were raised through the issuance of bonds with warrants (BW). The company sought to raise 20 billion won in total, but collected 15.5 billion won as the public subscription rate came to 77.58%. A BW is a bond with the right to subscribe to new shares attached. Earlier, in July last year, it raised 13.3 billion won through a paid-in capital increase and used 7 billion won of that to support CRK.
◇Raising funds through paid-in capital increase and BW issuance…into a loss-making subsidiary
The market is voicing concerns that successive fundraisings could significantly dilute the equity value of the parent company's shareholders. The new shares issued in the previous paid-in capital increase totaled 8.5 million, equivalent to 55% of the then total number of issued shares (15,391,605). With this BW issuance, the number of shares that can be issued in the future is 10,632,642, or 44.5% of the previously issued shares.
Another risk is payment guarantees. If CRK fails to repay its debt due to management difficulties, Autech must bear it instead. Autech provides payment guarantees of about 42.8 billion won to CRK and about 5.6 billion won to a CRK special purpose company (SPC). Given Autech's current assets (411.6 billion won) and capital (144.2 billion won), the immediate burden is limited, but observers note it could act as a potential contingent liability.
As repeated support for the subsidiary continues, doubts are being raised in the market about the overall governance structure. Given the structural characteristic that Autech and Chairperson Kang Sung-hee sit at the top of CRK's governance, there are suggestions that the company's capital injections could ultimately help defend the controlling shareholder's management control or offset personal losses.
A financial investment industry expert said, "Autech holds more than 70% equity in CRK, so it can step in to support the subsidiary to defend against losses," while adding, "Since Chairperson Kang also holds equity in CRK, a potential conflict of interest is being raised." Kang's current equity stake in CRK is 13.9%.
However, the company explained, "Support for CRK is not a simple financial transfusion but part of a strategic investment to strengthen core business competitiveness at the group level and to 'optimize the future industrial structure,'" and added, "In particular, support for CRK was carried out through transparent decision-making at a broader, principled level to enhance the company's fundamental value, regardless of any particular shareholder's interests."
Concerns are mounting over support for the subsidiary given that Autech itself is suffering from weak results. On a consolidation basis in 2025, Autech's revenue was 852.1 billion won, down 6.28% from the previous year (909.2 billion won). Over the same period, the operating loss was 2.3 billion won, smaller than the previous year's 14.8 billion won, but still in the red.
The share price also fell sharply while support for the subsidiary was repeated. The stock, which topped 19,000 won in 2021, fell to 1,791 won on the 18th. Even considering that the share price was higher than usual then due to the COVID-19 special, the decline is seen as steep.
◇No. 2 shareholder, through a shareholder proposal, says "the board composition must be transparent"
EcoLead, Autech's No. 2 shareholder, has submitted a shareholder proposal ahead of the shareholders meeting on the 27th. Autech plans to deal with agenda items at the meeting including the appointment of inside and outside directors, the appointment of an auditor, approval of the compensation limit for directors and the auditor, and approval of a plan to hold and dispose of treasury shares.
Through its shareholder proposal, EcoLead demanded: ▲ strengthening the independence of outside directors and the board's oversight function ▲ establishing and disclosing management standards for the CEO's concurrent posts at subsidiaries ▲ codifying the principle of performance linkage and caps in the CEO's compensation criteria ▲ establishing a mid- to long-term shareholder return policy ▲ reviewing a treasury share cancellation policy and drawing up an execution plan. In particular, regarding the recent change in the outside director candidate, it stressed, "There is a need to review candidates through careful and transparent procedures related to board composition."
EcoLead said, "Even though Autech is a company with technological prowess in special-purpose vehicles such as ambulances and in refrigeration and cold storage equipment, it has not been fully valued in the market in recent years," and added, "We submitted a shareholder proposal to enhance Autech's long-term corporate value and to establish a reasonable governance framework as a listed company."