English translation of the original Korean report. Images and source documents may contain Korean text.

With the appellate court sentence for Yu Jun-won, CEO of Sangsangin, who was sentenced to four years in prison for illegal lending in the first instance, scheduled for next January, the contract for the sale of Sangsangin Savings Bank, which Sangsangin is promoting, includes a clause that will separately settle the fines and recovery from this criminal case after the transaction. The amount to be settled may vary depending on the result of the second instance.

According to the financial supervision authority’s electronic disclosure system on the 4th, Sangsangin filed a corrected disclosure on the 2nd, changing the disposal date of 90.01% (12.24 million shares) of Sangsangin Savings Bank shares from November 2nd to 13th. The sale proceeds are 110.7 billion won, and the buyer is KBI Group.

This disclosure contains the phrase ‘planned to settle the fines and recovery from the criminal case currently being processed related to Sangsangin Savings Bank.’ This clause has been included since the first contract disclosure on October 31st last year. Losses from loans and securities approved by Sangsangin Savings Bank are also to be settled after the transaction.

In the first instance of this case, the fine imposed on Sangsangin Savings Bank was 6.436 billion won, and the recovery was 3.218 billion won. Combined, they amount to 9.654 billion won, which is 8.7% of the sale proceeds.

On February 18th last year, the Seoul Central District Court sentenced Yu, the former CEO of Sangsangin Plus Savings Bank, to four years in prison and a fine of 18.549 billion won, and a recovery of 1.12 billion won for violating the capital market law. The court found the charges of market manipulation and embezzlement under the Special Act on the Punishment of Economic Crimes not guilty. Sangsangin Plus Savings Bank was also sentenced to a fine of 11.888 billion won and a recovery of 5.944 billion won. Yu and others all appealed.

In July and September 2020, the prosecution brought Yu and others to trial. The core of the case was that the KOSDAQ-listed companies publicly stated that they raised investment funds through convertible bonds (CB, corporate bonds that can be converted into shares), but in reality, they obtained secured loans from the savings banks in the Sangsangin group. The first instance court deemed the disclosure of the secured loan as fraudulent improper transactions.

The date for the appellate court sentence of Yu Jun-won, CEO of Sangsangin, is scheduled for January 13th next year. It is about 6 years and 6 months since the first indictment in July 2020.

■ The sale has been postponed six times, but the CEO’s compensation increased by 49%

The sale continues to be delayed. The disposal date has changed six times, from the original March 31st this year to April 30th, August 31st, September 21st, October 12th, and November 2nd to November 13th. In this disclosure, Sangsangin stated that this date is not the day to complete the transaction, but the day to discuss the continuation of the contract and changes in conditions with the buyer.

The disclosure states that if the Financial Supervisory Service does not approve the stock acquisition by August 31st, either party can terminate the contract by written notice. That deadline has already passed. KBI side withdrew the stock acquisition approval application submitted to the financial authorities at the end of August. KBI Group stated that it will continue the acquisition negotiations.

The sale started from a directive by the financial authorities. In December 2019, the Financial Supervisory Service decided to impose disciplinary measures equivalent to suspension of duties on Yu as the former CEO of Sangsangin Plus Savings Bank. Sangsangin filed a cancellation lawsuit, but the Supreme Court ruled in May 2023 that the decision was final.

In October of that year, the Financial Supervisory Service ordered Sangsangin to sell the shares of the two savings banks because it did not meet the requirements for major shareholder qualifications. Sangsangin lost the first instance lawsuit on this order in December 2024, and the appellate court is currently proceeding. The effect of the disposal order is suspended until 30 days after the judgment is announced.

Yu is the largest shareholder of Sangsangin with 23.65% of the shares. Including the shares of related parties, such as Kim Soo-kyung, CEO of J.S.N.S., who is a relative (6.51%) and J.S.N.S., which is 100% owned by Kim (2.08%), the total is 33.42%. Sangsangin owns 100% of the shares of the two savings banks. Yu has been the CEO and registered internal director of Sangsangin since March 2016.

Yu received a total compensation of 1.937 billion won from Sangsangin last year. It includes 1.2 billion won in salary and 737 million won in bonuses. This is a 49% increase from 1.298 billion won the previous year. Sangsangin stated in the business report that it gave bonuses based on business performance evaluated by sales and operating profit.

In the same year, Sangsangin’s consolidated sales were 418.6 billion won, a 51.9% decrease from the previous year. The operating loss was 48.2 billion won, and the net loss was 123.1 billion won. On a separate basis, the net profit turned from a 2.5 billion won loss in the previous year to a 14.7 billion won profit, and Yu’s compensation is 13.2% of this separate net profit. Sangsangin has not distributed dividends in the past three years. Yu’s first-half compensation this year is 620 million won.

Yu pledged 6.072 million shares (46.4%) of his 13.087 million shares to SK Securities as collateral and borrowed 2 billion won. The interest rate is 6.5% annually. He repaid part of the principal in May and extended the maturity, and the extended maturity will come due on the 27th of this month.

Sangsangin disclosed that it will provide the shares of Es Innovation New Technology Association, a related company, or the shares of the listed company Synergy Innovation to the buyer as the first priority to guarantee the obligation of loan compensation. Synergy Innovation is the second largest shareholder with 8.42% of Sangsangin’s shares. The specific details of the collateral will be separately negotiated. The conditions negotiation with the buyer is on the 13th, and Yu’s appellate court sentence is two months after that.