President Lee Jae-myung on the 8th cited a news report about KOSDAQ-listed INTOPS and posted on social media, "Isn't this stock manipulation?" drawing attention.
The core of the criticism is that INTOPS, in the process of issuing exchangeable bonds (EB), granted a call option (buyback claim), creating a structure with an incentive to suppress the share price.
Earlier, INTOPS disclosed that in Sep. last year it would issue 13 billion won worth of EB backed by 630,792 treasury shares it holds (a 3.83% equity stake) as the underlying asset. The exchange price is 20,609 won, and the exchange claim date starts on Oct. 15, 2025.
◇ If it exceeds 130%, the call option can be exercised… "incentive to suppress the stock" vs. "customary structure"
The market is focusing on the call option clause attached to the EB. A call option gives INTOPS, the issuing company, the right to buy back from investors the EB they hold if certain conditions are met. INTOPS' EB includes a clause stating that "only if the closing price of the common stock exceeds 130% of the exchange price for 10 consecutive trading days, the bondholder may demand that the purchaser buy all of the electronically registered amount of this bond held by the bondholder."
From the investor's perspective, the moment the share price crosses this guideline, the chance to realize gains is stripped away entirely. The argument is that there is a structural reason forcing the institutions that took the EB to press the short-selling button to curb price increases.
In particular, the fact that after this EB issuance INTOPS was designated four times as a short-selling overheated stock by the Korea Exchange (KRX) is adding to the suspicion. Until the EB was issued, INTOPS had no history of being designated a short-selling overheated stock.
On the other hand, there is a counterargument that this EB structure is unlikely to lead bondholders to suppress the stock. Even if the share price stays above 130% of the exchange price, the 10-day window allows the bondholder to exercise the exchange right before the company can exercise the conditional early redemption right (call option). Under the contract, bondholders can exercise the exchange right starting Oct. 1, 2025, the issue date.
However, 30% of the total amount is subject to a lockup and cannot be exchanged immediately, and only the remaining 70% can freely exercise the exchange right.
The securities industry also notes that such a structure itself is not rare in the primary market. In fact, in the past, LG Chem and Hotel Shilla also issued EBs with call options allowing the issuing company to redeem the bonds if the share price rose above a certain level.
◇ Treasury share EB and inheritance controversy also under scrutiny
Investors also criticize the fact that, while the current administration is pushing to expand the retirement of treasury shares, INTOPS issued EBs using treasury shares. When discussions to amend the Commercial Act gained momentum last year, many listed companies opted to issue treasury share EBs instead of retiring treasury shares, and INTOPS likewise issued EBs during the same period, prompting criticism that it was trying to bypass shareholder-return policies.
Experts agree on the point that this is a crafty use, but explain that it is hard to criticize the act of raising funds via EBs itself. Not only retiring treasury shares in the short term but also raising funds at low interest rates to enhance corporate value can be a long-term way to boost shareholder value.
Some shareholders also take issue with the fact that during a period of weak share prices, Platel, a family company in which the second-generation owner is the largest shareholder, added to its equity stake. As of the end of Sep. last year, Platel's equity was 3.09%, which rose to 3.27% by the end of Mar. this year. Platel is a family company owned by Kim Geun-ha (94%), Kim Yun-seo (3%), and Kim Jun-seo (3%).
However, the securities industry also says the increase in equity is not large, and with the largest shareholder and related parties already holding more than 38%, there is little incentive to intentionally depress the share price. A source well-versed in the securities industry said, "With the largest shareholder's control already solid, it is hard to conclude they intentionally tried to suppress the share price to secure an additional equity stake of around 0.2 percentage point."
The company said, "The call option structure is one that has customarily existed in the capital market," adding, "As the share price fell due to recent weak earnings, we moved to buy shares as part of responsible management."