HYBE and Min Heejin is fighting over stock of ADOR?
One news outlet of Korea, Chosun Biz posted an exclusive news about HYBE and Min Heejin conflict. It said that Min Hee Jin was not satisfied about the amount of money that she got from HYBE. The conflict started by the stock option and the tax.
Original news article in Korean, the source of the article – https://biz.chosun.com/stock/stock_general/2024/04/23/U5CAW446W5BFBAMN3MSBI2LVOE/?utm_source=naver&utm_medium=original&utm_campaign=biz
According to the investment bank (IB) industrial official on the 23rd, CEO Min Hee Jin has held stock options since the establishment of Ador in 2021. In terms of stocks, it is said that it accounted for 15% of the company’s total stake.
However, CEO Min Hee Jin claimed that the stake was too low compared to the contribution of her raising New Jeans, and HYBE gave her an additional stock option in 2022. Converting it to stocks, she reportedly had a stake of nearly 20%.
Reportedly, for CEO Min Hee Jin, additional stock options were not a satisfactory alternative. Comprehensive income tax is levied on profits from exercising stock options, and the progressive tax rate is up to 45%. For CEO Min Hee Jin, she has to pay half of her income as tax. In response, HYBE canceled the grant of stock options early last year and sold stocks to CEO Min at a low price through a resolution of the board of directors.
As a result, Min Hee Jin became the second largest shareholder with 18 percent stake (573,160 shares). The majority shareholder is HYBE (having 80 percent of the total stake). Min Hee Jin also has the right to claim share repurchase (putback option). In other words, she has the right to resell her stake to HYBE in the future. If the value of Ador’s company reaches 1 trillion won, Min Hee Jin will be able to make 200 billion won by reselling her own shares.
HYBE was able to sell shares cheaply to CEO Min Hee Jin because Ador was a deficit company until the year before last. In 2022, Adore had an operating loss of 4 billion won and a net loss of 3.2 billion won. New Jeans debuted in August 2022. The two sides bought and sold shares early last year. In order to appease CEO Min Hee Jin, Hive has handed over stocks whose value will rise sharply in the future at a low price based on its previous value.
However, HYBE’s efforts for selling stocks in cheap price did not work to make peace between HYBE and Min Heejin. Earlier this year, HYBE reportedly received a tip that Min Heejin planned to take over the company in partnership with a private equity fund (PEF) manager, and HYBE reportedly attempted to quietly resolve the issue with Min Heejin. An entertainment industry source said, “After the conflict had not been resolved, I think Min Heejin decided that it would be a good excuse since ILLIT made its debut in March.”
As the positions of the two sides are sharply opposed, there is a high possibility that a fierce legal battle will take place in the industry. HYBE and Min Heejin conflict doesn’t seem to be solve easily, as two of them all selected law firms to represent them.
Meanwhile, Ador executive says that the document HYBE is talking about as an evidence of Min Heejin selling ADOR, is not true. They say it is not a serious document that would occur conflict between HYBE and Min Heejin, but just a note that an executive scribbled, so executive feels sorry that HYBE is making CEO Min’s image negatively. Previous article about HYBE and Min Heejin controversy, CLICK HERE.
