BUCKET STUDIO, which is facing delisting from the KOSDAQ market, has entered into a public sale of its management rights as a last resort. While Vidente, the largest shareholder also faced with delisting, previously attempted to sell its management rights privately, it shifted to a public sale following the delisting decision. BUCKET STUDIO's actions are expected to influence future decisions on Vidente's listing substantive review.

BUCKET STUDIO announced that it will sell 5.59% of common stock owned by the largest shareholder, Initial 1 Investment Association, and 27.16% of convertible preferred shares (when converted to common stock), as well as its management rights through a competitive auction method to improve the company's governance structure and ensure managerial transparency. The company has selected Samjeong Accounting Corporation as the sale coordinator and plans to sell the management rights within eight months.

Currently, Initial 1 Investment Association is the largest shareholder of BUCKET STUDIO with 17.59%, while Vidente holds 5.73% and CEO Kang Ji-yeon holds 0.02% as special affiliates. However, the shares held by Vidente are not included in the sale.

Graphic=Son Min-gyun

CEO Kang Ji-yeon noted that the decision to sell management rights is aimed at resolving the long-standing 'owner risk' and re-emerging as a sound listed company. Initially, the company had pursued a private competitive bidding method for the sale of management rights. The company believes that the public sale may incur significant expense and time, and since there is much interest in the market, it foresees many acquisition candidates even without conducting a public sale.

However, circumstances changed when the Korea Exchange's Corporate Review Committee decided to delist Vidente, which was previously pursuing a private sale. CEO Kang Ji-yeon commented, 'In the case of the “private competitive bidding method,” the supervisory authority's opinion was that fair information or opportunities were not provided to various potential acquirers, and the process could be somewhat opaque.'

BUCKET STUDIO, represented by Kang Ji-yeon's brother, Kang Jong-hyun, who was once suspected of being the actual owner of Bithumb, received a refusal of audit opinion for its FY 2023 financial statements, causing grounds for delisting. Vidente, which holds equity in BUCKET STUDIO, and INBIOGEN, the largest shareholder of Vidente, also became subjects for delisting due to successive refusals of audit opinions.

The issue arose when Kang Jong-hyun, the brother of CEO Kang Ji-yeon, was on trial for embezzling funds from Vidente and related companies, specifically related to Vidente's shares in Bithumb Holdings (34.22%). As the court decided on preservation of the confiscation, normal audits of the affiliates' financial statements became impossible.

Subsequently, Vidente opposed the court's preservation decision and filed a lawsuit demanding its return, ultimately winning. Accordingly, Vidente resubmitted an audit report with an 'appropriate' opinion and thus escaped the formal delisting requirements. However, due to internal incidents of embezzlement and breach of trust, both Vidente and BUCKET STUDIO must undergo substantive examination regarding their listing qualifications.

Vidente and BUCKET STUDIO submitted a management plan to the Korea Exchange to maintain their listings, but they are reportedly still receiving concerns about their opaque governance structure. In response, Vidente attempted to sell its management rights, but the privately conducted sale has not gained significant trust from the exchange.

The Corporate Review Committee made the decision to delist Vidente. This is also why BUCKET STUDIO announced its public auction for management rights. After being designated for substantive review last month, BUCKET STUDIO submitted an improvement plan, and the exchange is expected to decide on the delisting by the end of this month.

The KOSDAQ Market Committee, which was originally to decide on Vidente's delisting by the 23rd, also postponed its final decision slightly. On the 23rd, the committee announced that it would 'resume deliberation' regarding the delisting decision for Vidente, indicating that it would not reach a decision immediately and would observe a little longer.

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In particular, BUCKET STUDIO appears to have referenced the case of Chorokbaem Media, which recently revived. Chorokbaem Media was halted in trading and became a subject for delisting due to the embezzlement allegations against former Chairman Won Young-sik. The company then proceeded with a public sale of management rights, resulting in a change of the largest shareholder to Q Capital Partners.

The Korea Exchange positively evaluated the change of largest shareholder and decided to maintain the listing of Chorokbaem Media, allowing trading to resume. However, the situations of BUCKET STUDIO and Chorokbaem Media differ. Even if Initial 1 Investment Association sells its shares, chances are high that existing relations will be maintained, and unlike Chorokbaem Media, BUCKET STUDIO has accumulated losses for a long period.

In this regard, the Korea Exchange stated, 'Improvement in governance structure cannot be expected merely by planning to change the largest shareholder,' adding that 'it will conduct a comprehensive examination considering whether past company problems can be resolved following the sale, whether new acquisition candidates are qualified, and whether the company holds value as a going concern.'

Meanwhile, the potential delisting of Vidente and BUCKET STUDIO could also impact the listing of Bithumb, which remains a related company. Bithumb's largest shareholder is Bithumb Holdings (73.56%), and Vidente is a major shareholder of Bithumb Holdings. The unlisted company DAA recently announced that it exercised call options on part of the equity held by Vidente, becoming the largest shareholder of Bithumb Holdings (34.20%), but the equity held by Vidente (30.00%) still remains significant.