Satoshi Holdings, a KOSDAQ-listed company, has changed its name four times since last year. The current name, adopted in November, emphasizes its focus on virtual assets like Bitcoin. Recently, the company has also ventured into new businesses, including aerospace and artificial intelligence (AI) data centers. However, most of its revenue still comes from online health food sales and women's clothing, with its core operations operating at a loss.
Recently, the company engaged in a peculiar financial transaction. It used borrowed funds to cover a capital increase payment for its largest shareholder, resulting in a subsidiary becoming the new major shareholder. The purpose of this complex transaction raises questions.
According to the Financial Supervisory Service's electronic disclosure system, Satoshi Holdings quickly repaid its 11th, 12th, and 14th convertible bonds (CB) and short-term borrowings as soon as the funds from a third-party capital increase targeting Lucent Investment Association were received. Market analysts suggest that this capital increase and CB repayment transaction may not be aimed at normalizing the company or investing in new businesses, but rather supporting the cashing out of the former major shareholder.
The situation is as follows: Satoshi Holdings recorded an operating loss of 2.62 billion won and a net loss of 9.37 billion won in the first half of this year due to poor performance in its health food and online commerce sectors. It received a 'refusal of audit opinion' in its semi-annual review report and was designated as a management issue. To defend its stock price and secure justification, the company promoted new businesses in drone control and AI data center fiber optics. However, the majority of its first-half revenue of 8.14 billion won still came from its existing operations, with only 7 million won generated from new businesses like aerospace and AI.
As its financial structure deteriorated, Satoshi Holdings sold its entire stake (3,466,056 shares, 12.14% ownership) in its subsidiary, Korea Advanced Materials, to Nakamoto Investment Association and Flake for 10.5 billion won on August 26. However, not a single won entered Satoshi Holdings, as the 10.8 billion won in CBs held by Nakamoto Association and Flake was offset against the sale proceeds.
This led to a rapid reversal of the major shareholder relationship within just two weeks. After Nakamoto Investment Association acquired the stake in Korea Advanced Materials, the company issued a private CB worth 14.7 billion won on September 2 to raise funds. It then invested this money into its subsidiary, Lucent Investment Association, which subsequently acquired new shares from Satoshi Holdings' capital increase, becoming the new largest shareholder with a 35.97% stake. In just two weeks, the governance structure shifted from 'Satoshi Holdings → Korea Advanced Materials' to 'Korea Advanced Materials → Lucent Investment Association → Satoshi Holdings.'
There are also concerns about the whereabouts of the cash from the capital increase. Immediately after the first capital increase of 7 billion won was deposited on September 10, Kim Byeong-jin, the former major shareholder and effective controlling shareholder, purchased 5 billion won worth of the 12th CB held by his personal company, Purple City, before its maturity. On September 15, he also repaid an additional 2 billion won of the 11th CB held by Sang Sang In Savings Bank, 1 billion won of the 14th CB held by the former major shareholder Metaflex, and 300 million won of the CB held by individual creditor Lee Jun-min. This suggests that the funds raised through external debt from the capital increase were ultimately used as an exit route for the former major shareholder's personal company and financial creditors.
A financial industry insider noted, 'With no cash generation ability and having received a refusal of audit opinion, the funds raised through external debt from the capital increase have immediately flowed out to repay the CBs of the former major shareholder's personal company and specific creditors. The financial risks arising from this process will inevitably be passed on to minority shareholders, who hold a 41.83% stake.'
* This article has been translated by AI.
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