Treasury-share cancellation puts controlling owner's stake at 48%; INVENI's voting stake could fall below 50% if EB is exchanged [fn Market Watch]

[Financial News] The stake held by the largest shareholder's side at INVENI, an investment holding company affiliated with LS Group, has risen to the 48% range through the cancellation of treasury shares and open-market purchases, among other factors. However, exchangeable bonds (EB) issued last year remain a factor that could alter the voting-rights structure in the future. Excluding treasury shares, which carry no voting rights, the largest shareholder's side holds about 56% of the voting rights. But that share could fall below 50% if all the remaining EB is exchanged.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 29th, Koo Ja-eun, chairman of LS Group and INVENI's largest shareholder, and related parties held a total of 12,690,806 shares as of the 28th. That represents 48.35% of the 26.25 million shares issued, up 4.41 percentage points from 43.94% in early March.
The increase in the stake was driven by the cancellation of treasury shares and open-market purchases by the controlling family. INVENI cancelled 250,000 treasury shares in March this year, followed by a 5-for-1 stock split in April. In September, it cancelled an additional 1 million treasury shares, measured on a post-split basis. The total number of shares cancelled this year amounts to 2.25 million on a post-split basis.
Cancelling treasury shares reduces the total number of shares issued, which has the effect of increasing the nominal stake of existing shareholders. However, treasury shares do not carry voting rights to begin with, so their cancellation does not itself increase existing shareholders' share of the voting rights.
A key factor is the EB worth 46.8358 billion won that INVENI issued last September. At the time, it designated 671,000 treasury shares as the shares subject to exchange, equivalent to 3,355,000 shares on a post-split basis.
By the end of April this year, 496,660 of those shares had been exchanged, leaving 2,858,340 shares subject to exchange, worth about 39.9 billion won. This amounts to about 10.9% of the current total shares issued. The exchange price is 13,960 won per share on a post-split basis, about 0.9% higher than the closing price of 13,830 won on the 28th.
If the EB exchange rights are exercised, treasury shares that had no voting rights will be transferred to outside investors and gain voting rights. Unlike an issuance of new shares, this would not change the total number of shares issued or the number held by the largest shareholder's side. But as the number of shares with voting rights increases, its share of the voting rights could decline.
Assuming there have been no further EB exchanges or other changes in treasury shares since the end of April, and factoring in the September cancellation of treasury shares, about 3.56 million treasury shares would carry no voting rights. Excluding these from the 26.25 million total shares issued leaves about 22.69 million shares with voting rights, putting the largest shareholder's side's share of the voting rights at an estimated 55.9%.
By contrast, if all 2,858,340 remaining shares subject to EB exchange are transferred to outside investors, the number of shares with voting rights would rise to 25.55 million. In that case, the largest shareholder's side would retain its nominal stake of 48.35%, but its share of the voting rights would fall to about 49.7%. The difference could be about 6.3 percentage points, depending on whether the exchange takes place.
[email protected] Kim Hyun-jung Reporter