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| Stacks of corrugated sheets of cardboard. Korea Times file |
By Lee Kyung-min
Criticism is mounting against a planned bid for an initial public offering (IPO) by Tailim Paper, a delisted corrugated cardboard manufacturer blasted for its widely undervalued share price and high dividend payouts upon delisting in 2016.
Minority shareholders claim they were essentially forced to sell their shares at around only a fourth of the market price, in what they consider abuse of a tender offer by IMM Private Equity.
The local private equity fund (PEF) acquired the Gyeonggi Province-based manufacturer and its shipping affiliate in July 2015 for 400 billion won ($340 million) and sold it to Sae-A, an apparel manufacturer, for 730 billion won in 2019.
The deal was inked after the PEF, with over a 95-percent stake, exercised a put option in November 2017 to sell the remaining 5 percent of shares held by retail investors at a per-share price of 3,600 won, far lower than then market price in the mid-10,000 won area.
Many minority shareholders had no choice but to follow. This was because the commercial law stipulates that shares lose their entire value regardless of whether the holder has cashed out or not, once the largest shareholder with an over-95-percent stake exercises the option and deposits that amount.
The firm was delisted in August 2016. The PEF bought shares from minority investors soon thereafter and sold them for 34,000 won per share, while paying 4,311 won in per-share dividends.
The corporate performance of the firm with about a 10-percent share in the local corrugated cardboard market is improving, buoyed in large part by a spike in delivery demands brought on by the COVID-19 pandemic. Its corporate value was about 300 billion won in 2015, but has since more than doubled.
Last year, its sales amounted to 743.3 billion won and its operating profit 73.8 billion won. Sales rose 72.7 percent year-on-year, but operating profit fell 4.3 percent. Its net profit last year rose to 76.4 billion won, up 27.9 percent from 59.7 billion won, year-on-year. Sales were 430.2 billion and operating profit was 77.2 billion in 2019.
The firm submitted a listing application for preliminary review with the Korea Exchange on Oct. 7, seeking an IPO early next year. The financial authorities will determine later this year whether the firm is eligible for the benchmark KOSPI listing.
The number of shares scheduled to be listed is over 30.61 million, about 30 percent of which, or over 9.1 million shares, will be raised through the public offering. The deal underwriters are Shinhan Investment and Hana Financial Investment.
