Exchange, Sambutogeon Designated as 'Management Items'... Accounting Firm Issues Disclaimer of Opinion
Suspension of Stock Trading
After gaining attention as a Ukraine reconstruction-themed stock earlier last month, Sambu Construction, which faced allegations of stock price manipulation, was designated as a management stock after receiving a refusal of review opinion from its accounting auditor for the semiannual report.
The Korea Exchange designated Sambu Construction as a management stock and suspended its stock trading on the 16th. This was because Sambu Construction received a refusal of opinion on its consolidated financial statements for the first half of this year from Samil Accounting Corporation on the 14th.
Samil Accounting Corporation pointed out that Sambu Construction’s consolidated operating loss for the first half reached 40.9 billion KRW, net loss was 51.6 billion KRW, and accumulated deficit as of the end of June was 256.7 billion KRW. Sambu Construction also has short-term borrowings maturing within one year amounting to 171.2 billion KRW.
Additionally, in April, Sambu Construction signed a contract to sell some of its land holdings for 130 billion KRW, but if the urban development plan approval under the Urban Development Act is not obtained within one year and six months from the contract date, it must return the land sale price plus interest costs to the buyer. This was also cited as a factor raising doubts about the company’s ability to continue as a going concern.
Samil Accounting Corporation stated, "Although management prepared cash flow analyses and other information, they failed to provide sufficient and appropriate evidence regarding the financing plans used in the analysis," and thus did not secure the necessary audit evidence.
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The opposition parties, including the Democratic Party, raised suspicions of stock price manipulation, noting that after a message saying "Check Sambu" appeared in a group chat involving Lee Jong-ho, former CEO of Black Pearl Investment, who was implicated in lobbying allegations to save former Marine Corps 1st Division Commander Lim Seong-geun, Sambu Construction’s trading volume and stock price surged. They also reported that the Korea Exchange has initiated an investigation into abnormal trading activities.
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