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

Squaretek (formerly LN Technology), which had decided to sell its financial subsidiary acquired for 100 billion won for 55 billion won, has again postponed the schedule for receiving the remaining sale proceeds. The company, led by CEO Kim Kang-ho, has also postponed the subscription date for a 70 billion won capital increase to next year, meaning that the inflow of funds through the asset sale and new share issuance has been delayed together.

According to the Financial Supervisory Service Electronic Disclosure System on the 7th, the company changed the scheduled disposal date of its entire shares in Apex Investment from October 30 to November 30 on the 29th of last month. The remaining payment, excluding the two installments of the down payment, is 475 million won. The originally scheduled disposal date of September 3rd was extended twice, passing through October 30th.

Squaretek is a company that produces LTCC (Low Temperature Co-fired Ceramic) materials and components for mobile communication base stations, as well as multilayer ceramic substrates for medical devices and defense industry. It has a strong technological advantage in independently developing LTCC core materials and producing materials to finished components. This ceramic material and component manufacturer has now sold its financial subsidiary just over a year after acquiring it.

The company acquired shares in Apex Investment for 100 billion won last July. Although the sale price is 45 billion won less than the purchase price, this cannot be considered as a new disposal loss. According to the semi-annual report, the book value of the investment shares decreased from 727.1 million won at the end of last year to 544.3 million won after a 182.8 million won evaluation loss in the first half of this year. The sale price of 55 billion won is at a similar level to this book value.

There was also an expense of repurchasing convertible bonds (CBs) while waiting for the inflow of funds. The company repurchased 25 billion won of the 6th CB issued, which had been issued to offset the real estate purchase price, in September, and the remaining 26 billion won in October before maturity. The repurchase amount, including principal and interest, was approximately 522.1 million won. The company stated that it will also fully repay this issue and release the mortgage on the related real estate.

■ Delay of remaining sale proceeds from subsidiary and capital increase for operating funds

The subscription date for the 70 billion won third-party placement capital increase has also been changed from October 30 to January 29 next year. The company will allocate 3,286,384 new shares at 2,130 won per share to the Jentechnology Investment Fund. Once the subscription is completed, this fund will hold 19.45% of the shares, becoming the largest shareholder. The expected listing date of the new shares is February 18 next year.

The current largest shareholder is the Cross 1 Fund, which holds 15.33% of the shares. According to a large-scale holding report from July, the largest shareholder of this fund is the Cross 2 Fund, which holds 39.98% of the shares, and the largest shareholder of the Cross 2 Fund is Yoon Chang-don, former independent director of Squaretek, with an investment ratio of 55.60%. The company changed its name to Squaretek at a special shareholders’ meeting on the 14th of last month and dismissed Yoon, the former independent director. The proposal to dismiss Kim Kang-ho, the CEO, as an inside director was rejected.

Yoon and three others applied on July 23 for a temporary injunction against the company and Kim for the suspension of the CEO and inside director’s duties. The applicants claimed that the position no longer exists due to the CEO’s resignation, and requested the suspension of duties and the temporary recognition of another person’s position as CEO. On September 10, the Suwon District Court rejected the application, stating that it was difficult to recognize the right to protection or the need for preservation. The appeal was also dismissed on October 15 due to failure to correct the filing fee and delivery costs within the deadline.

The consolidated sales for the first half of this year were 932.1 million won, and the operating loss was 215.7 million won. The net loss, including the 285.6 million won discontinued operations loss, was 656 million won, exceeding the 386.4 million won net loss for the entire previous year. However, the consolidated cash and cash equivalents as of June 30 were 1,325.2 million won, and it is necessary to distinguish between the balance at the end of the first half and the inflow and outflow of funds afterwards.

The company stated that the purpose of selling Apex Investment is to improve asset management efficiency and financial structure, and the purpose of the capital increase is to secure operating funds. The latest sale announcement includes a condition that if legal approval is delayed, the deadline can be extended, along with the final payment schedule on November 30.