SNT sends position statement to Smac shareholders

Proposes capital participation, employment guarantees

Warns of full review if relations fail to improve

[Provided by SNT]
[Provided by SNT]

SNT has urged shareholders of Kosdaq-listed Smac to establish a rational shareholder relationship aimed at corporate growth and enhanced shareholder value, warning it would conduct a full review of its position as the largest shareholder if no improvement is made.

According to industry sources, SNT released a position statement to Smac shareholders on Wednesday titled "Background of Smac Investment and Our Position on Future Shareholder Relations."

SNT said moving beyond past management disputes and establishing a rational shareholder relationship focused on corporate growth and shareholder value is a prerequisite for continuing its role as the largest shareholder.

SNT had earlier proposed a meeting with Smac shareholders on Sept. 29 to discuss mid- to long-term growth strategies, investment and financing, financial stability, and measures to enhance shareholder value. While it attempted to communicate with some key shareholders, no concrete meeting schedule has been confirmed.

Through the shareholder letter, SNT made clear that its initial investment in Smac was not intended as a hostile takeover. It said that even after becoming the largest shareholder, it had respected the standing of the existing management and prioritized enhancing corporate value through mutual cooperation.

On the origins of the management dispute, SNT said it escalated when Smac transferred a large volume of treasury shares to its employee stock ownership association and Manho Rope & Wire — either free of charge or at below-market prices — ahead of the record date for the annual general meeting. SNT said it had requested access to accounting records and an explanation at the time but did not receive sufficient materials or information, forcing it to pursue an injunction. It added that even after the injunction was granted, it has still been unable to review the accounting records.

SNT said that throughout this process, it prioritized understanding the company's actual condition and protecting the interests of all shareholders over an immediate proxy battle. When questions arose over duplicate proxy submissions at the annual general meeting on March 31, SNT chose not to exercise its voting rights and left the meeting, and it subsequently did not file a lawsuit challenging the meeting's resolutions. SNT added that a court had rejected Smac's claim that SNT had planned a hostile acquisition from the outset and had falsely disclosed its holdings as a simple investment.

"We proposed participating in capital expansion so that Smac can secure growth funding without relying on additional borrowing, and guaranteeing the employment of executives and employees and the stability of the organization," an SNT official said. "At the same time, we need board participation and a management oversight framework that allows us, as the largest shareholder, to reasonably supervise the company's key management and financial matters."

"If significant management and financial uncertainties at Smac remain unresolved and no meaningful improvement in relations is achieved despite these efforts, SNT will have no choice but to conduct a full review of the basic direction of the future shareholder relationship," the official added.

SNT, combined with SNT Motiv, holds a 28.15 percent stake in Smac, making it the largest shareholder. According to Smac's disclosure filings and brokerage research reports, Smac's debt-to-equity ratio rose from 158.7 percent at end-2022 to 221.5 percent at end-June this year. Over the same period, total borrowings increased roughly 2.6 times, from 64.9 billion won ($48.5 million) to 171.4 billion won. SNT has expressed concern that this debt burden could lead to higher interest costs and constrain the company's capacity for investment.


jiyun@heraldcorp.com