[Edaily Marketin, Reporter YunJi Kim ] Content platform company OGQ passed a proposal for a selective capital reduction worth approximately 9.4 billion won at an extraordinary general meeting of shareholders. While this marks a step forward in resolving the dispute over the return of investment funds, the issue of settling the personal judgment debt of OGQ CEO Shin Cheol-ho remains unresolved. The forced sale of shares held by the founder is also continuing, and uncertainty surrounding management control is expected to persist for the time being.

According to the investment banking (IB) industry on the 15th, OGQ held an extraordinary general meeting of shareholders that morning and approved a proposal for a selective capital reduction involving the acquisition and cancellation of up to 112,500 shares of Class 5 convertible preferred stock. The purchase price was set at 83,779 won per share, as determined by an external appraisal agency, totaling approximately 9.4 billion won. The capital reduction proposal was also approved at the subsequent meeting of common stockholders.

The capital reduction proposal was also approved at a separate Class 5 Convertible Preferred Stock shareholders’ meeting held that day. OGQ explained that this class shareholders’ meeting was a procedure requiring the consent of the investment fund, and that with this resolution, all shareholder meeting procedures necessary for implementing the capital reduction have been completed. CEO Shin told Edaily, “The Class 5 Convertible Preferred Stock shareholders’ meeting was an absolutely necessary procedure, and it was a matter that required the consent of the investment fund.”

This capital reduction was pursued so that OGQ could return the investment funds it had previously raised to the investment fund. Previously, in 2021, OGQ had raised 9 billion won from the investment fund to acquire Getty Images Korea, but after the acquisition fell through, a dispute arose over the return of the investment funds. The dispute led to litigation, and the court ruled that CEO Shin personally bore the obligation to repay the investment funds. Subsequently, with late payment interest added to the principal amount of 9 billion won, the judgment debt increased to approximately 12 billion won.

Unable to recover their investment, the investment fund initiated enforcement proceedings against CEO Shin’s personal holdings, including his stake in OGQ. While the investment fund maintains that it intends to recover the investment in accordance with the final judgment, OGQ argues that, since the company still holds the investment funds, it is more appropriate for the company itself to repay the investment rather than forcibly sell the founder’s controlling stake.

Amid disagreements between the two sides over the method of recovering the investment funds, OGQ has been pushing for a selective capital reduction through a paid-in capital reduction, in which it would directly purchase and cancel the convertible preferred shares held by the investment fund. The company’s intention is to repurchase these shares at fair value and return the investment funds to the investment fund.

With the capital reduction proposal approved at the shareholders’ meeting today, OGQ plans to accept purchase applications from holders of convertible preferred stock from the 16th to the 23rd. Following this, the company plans to complete creditor protection procedures by November 16, and then proceed with the signing of the purchase agreement, payment of the purchase price, and cancellation of the shares on the 17th. The actual scale of the capital reduction and whether the purchase price will be paid may vary depending on the shareholders’ purchase applications and the outcome of subsequent procedures.

However, the resolution of the capital reduction proposal does not directly lead to the settlement of CEO Shin’s personal judgment debt. This capital reduction is a capital transaction in which OGQ purchases the investment fund’s shares at fair value, and is distinct from a method that directly repays CEO Shin’s personal judgment debt. CEO Shin estimates that even if the investment fund recovers the capital reduction proceeds, approximately 2.5 billion won in debt—including late payment interest—will remain. Consequently, since CEO Shin finds it difficult to raise that amount in cash immediately, he has proposed to the investment fund that he provide his personally held shares as collateral.

As negotiations between the two sides regarding the resolution of the remaining debt have not yet been finalized, enforcement proceedings against CEO Shin personally are continuing. Speaking to reporters immediately after the general shareholders’ meeting that day, CEO Shin stated, “Just because a special resolution was passed today does not mean the matter has been resolved at this point,” adding, “Enforcement proceedings are continuing against my controlling stake, as well as my personal residence, salary, and retirement benefits.” He went on to explain, “I have proposed a plan to offer my personal shares as collateral, and depending on the outcome of future negotiations, it will be determined whether the dispute will be resolved or whether forced sales will continue.”

CEO Shin plans to discuss a proposal to offer his personal shares, valued at approximately 7 billion won, as collateral with the investment fund next week. He told Edaily, “I have proposed offering my personal shares as collateral, but we’ll have to see how the discussions go next week to know if they will accept it.”