Shareholders are mounting strong opposition over the IPO of LS's U.S. subsidiary Essex Solutions. The minority shareholders' alliance and the shareholder activism platform ACT said on the 20th they are beginning concrete action to block the listing of LS subsidiary Essex Solutions.
They noted that on the 16th they submitted a second petition to the Korea Exchange (KRX) urging the "immediate disapproval" of the preliminary listing review, and said, "Minority shareholders who had tried dialogue and persuasion have shifted their course to 'strongly block' it."
The shareholders' alliance said, "We respected the company's position and listened carefully while trying to persuade it, but in the end the company ignored shareholders' urgent demand that there must be no duplicate listing," and declared, "We are past the stage of persuasion with words and will move into full-fledged procedures to block the listing."
The shareholders' alliance rejected LS's review plan for a "special allocation of IPO shares to parent-company shareholders" as a typical trick. They noted, "In past controversies over listings of subsidiaries after similar physical partitioning, such as Oscotec and LTC, management also proposed shareholder allocations, but it only amplified shareholder backlash and was a failed precedent."
They continued, "Management must first withdraw the judgment that it will accept the evaporation of at least 1 trillion won in market cap to raise a mere 400 billion won," and said, "A special allocation of IPO shares is like proposing to damage shareholder value '80' when they had intended to damage it '100,' and we reject the damage itself."
They also stressed that a listing is not the only solution. As alternatives to a listing, they proposed ▲ attracting a strategic investor (SI) from among global corporations ▲ a paid-in capital increase through a third-party allotment, but claim management did not sufficiently review the alternatives.
They also warned the listing could lead to a chain of listings of other core subsidiaries in the group, including LS MnM (formerly Nikko Copper Smelting) and LS Cable & System, after this IPO.
On the 16th, the shareholders' alliance also sent a contents-certified letter to the company demanding to inspect and copy the shareholder registry. In preparation for a prolonged fight, they began raising legal expenses and activity funds through the ACT platform.
An LS official said, "We are considering additional return measures," and added, "We are preparing a second corporations briefing session within this month and will continue to listen to shareholders' voices."