HYBE, South Korea’s largest entertainment agency, is embroiled in a legal dispute with Min Hee-jin, CEO of its subsidiary ADOR, and may repurchase her shares for about 3 billion won ($2.1 million) if she is found guilty of breach of trust.
According to the industry sources on May 1, the shareholder agreement for ADOR stated that if Min and others violated the contract, HYBE has the right to buy all their shares directly or through a third party designated by HYBE as a call option.
A call option is a contract between a buyer and a seller to purchase a certain stock at a specified price until a defined expiration date. The purchase price per share under this call option is determined as the lesser amount between the par value per share and 70% of its fair value.
If HYBE’s allegation of breach of trust is proven, they could repurchase Min’s and other executive’s shares at their par value. Min’s shares, including management, are estimated to be worth around $2.3 million, which includes $2 million of the total value of ADOR’s capital of 11.6 million.
Min was initially allowed to sell 18% of her company shares at a set price (put option) from the end of this year, which was estimated to be around $72.5 million.
HYBE’s official stated that the call option is a safety measure that is necessary in shareholder agreements. It is intended to ensure that shareholders execute the agreement faithfully in exchange for promised compensation for the company’s success.
“Min’s breach of trust is sufficient grounds for the call option to be exercised. Also, disclosing such shareholder agreement details violates confidentiality and is grounds for termination of the agreement. Therefore, Min must fully cooperate with the authorities’ investigation and await the court’s decision,” HYBE’s official explained.
The Seoul Central District Court has started conducting hearings regarding HYBE’s request to hold a temporary shareholders’ meeting to terminate Min from his position. On Apr. 25, HYBE filed a complaint against Min and other individuals for breach of trust at the Yongsan Police Station in Seoul. Following this, HYBE also applied for permission to hold the temporary shareholders’ meeting.
