The CEO of Raemong Raein, a production company known for creating major dramas such as Reborn Rich and Sungkyunkwan Scandal, has expressed his grievance as he accused actor Lee Jung Jae’s company, Artist United, of causing financial damages.
Established in 2007, Raemong Raein has gained recognition through its involvement in popular drama productions. As a result, the company grew in size and was listed on the Kosdaq market in 2021. However, in March of this year, Raemong Raein was acquired through a paid-in capital increase by software development company Artist United, known to be majority-owned by Lee.
In response to this, CEO of Ramong Raein Kim Dong Rae released a statement on June 10, claiming that his management rights had been unfairly seized. Previously, as the largest shareholder of Ramong Raein, Kim transferred a significant stake worth $25.8 million in March through a paid-in capital increase to Lee and others. As a result, Lee became the largest shareholder of Raemong Raein.
In his statement, Kim explained, “I firmly believed that by partnering with Artist United, based on Lee’s network and capital strength, our drama production company could dream of global expansion. That’s why I willingly gave up my position as the largest shareholder through a paid-in capital increase without any management rights premium or selling existing shares.”
Kim also claimed, “Contrary to what was discussed before the investment, Artist United is currently using the funds owned by RaemongRaein to acquire an entertainment company listed on the stock exchange, which is currently suspended from trading.”
Kim stated, “I, along with the current management of Raemong Raein, conveyed to Artist United that we cannot accept the acquisition of a listed company that deviates from our core business of drama production. However, the response we received was that the CEO and the entire board of directors had been replaced.” Kim added that Raemong Raein has unilaterally been notified to hold a temporary shareholder meeting regarding a change in the articles of incorporation.
Kim also criticized Lee’s attitude as an investor. He stated, “Lee has never visited Raemong Raein even once, nor has he presented a concrete vision for the future related to management,” adding, “Acquiring another company using Raemong Raein’s cash assets just three months after becoming the largest shareholder, it seems nothing more than using our company for their benefit.”
Raemong Raein argued, “It has been confirmed through these actions that the real investment purpose of Artist United is not to secure intellectual property rights for Raemong Raein’s global expansion or to produce various contents as was discussed at the time of the investment agreement.” Kim further stated, “I cannot allow them to unfairly seize the management rights of Raemong Raein through deceptive methods. As the current CEO and chairman of the board, I cannot condone actions that damage shareholder interests, so I have no choice but to restrain them.” Kim further explained that he must protect the company and its employees that he has built over 18 years.
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Artist United also expressed its position through a statement in response to Kim. Artist United refuted, “Kim, the representative of Raemong Raein, has not complied with clear and normal contract terms and has violated the contract while falsely accusing Lee and the investors of Artist United.”
They argued, “Kim decided to leave the company for personal reasons and requested Artist United to acquire it.” According to their claim, it was Kim who first contacted Artist United to sell the company.
Currently, with the positions of both companies at odds, there have been fluctuations in the stock prices of Raemong Raein and Artist United. On June 11, Artist United’s stock price closed at $10.27, up 0.22% from the previous day. On the other hand, Ramong Raein’s stock price closed at $11.85 down 4.38% from the previous day.
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