[Listed Company at a Crossroads] Aluco Group ① Allegations of Owner Family Using KPTU Funds for KPTU Share Tender

KPTU Lent 3 Billion Won to Park Dobong’s Aluco Group Family Company
Owner Family Delays Repayment While Pushing KPTU Tender Offer
KPTU Loans 7.5 Billion Won to Related Parties Amid Liquidity Crisis, Undermining Shareholder Value

As the largest shareholder of KPTU, a KOSDAQ-listed company, has launched a public tender offer for shares, indications have emerged that internal funds from KPTU have flowed to the largest shareholder’s side. This effectively means KPTU's own money has been used to secure shares for its largest shareholder, fueling controversy.

According to the Financial Supervisory Service's electronic disclosure system on July 20, Alutec, the largest shareholder of KPTU, announced a public tender offer to purchase 1 million shares (17.46%) of KPTU at 4,000 won per share. The total amount is 4 billion won. If Alutec secures 1 million shares through the public tender offer, its stake will increase from the current 56.2% to 73.7%.

This public tender offer is interpreted as a measure to raise KPTU’s market capitalization. Since July 1, the Korea Exchange has revised its requirements so that KOSDAQ-listed companies must maintain a market capitalization of at least 20 billion won. If KPTU's market capitalization stays below 20 billion won for 30 consecutive trading days, it will be designated as an administrative issue stock; if the requirement is not met for 45 consecutive trading days within the following 90-trading-day period, the company becomes subject to delisting.

As of July 1, KPTU’s market capitalization was 18.7 billion won. For KPTU’s market cap to exceed 20 billion won, its stock price must be at least 3,500 won per share. This is why Alutec set the public tender offer price at 4,000 won per share, which is higher than the current market price.

The issue lies in the source of Alutec’s tender offer funds. As of the end of the first quarter of this year, KPTU had loaned 3 billion won to Alutec. Given that KPTU’s total cash-equivalent assets amount to only 450 million won, this is a significant amount. It is known that Alutec has yet to repay the loan and currently has no plans to do so. In effect, KPTU’s internal funds have been used, directly or indirectly, to strengthen the controlling power of its largest shareholder, Alutec.

Alutec is a corporation primarily engaged in aluminum alloy billet casting. It is a holding company overseeing two listed companies—Aluko, which is listed on the KOSPI, and KPTU—as well as 14 unlisted affiliates. Alutec is fully owned by the family of Aluko Group Chairman Park Dobong (42.4%) and Sera Park, CEO of AluMaterials (8.9%), among other family members.

Against this backdrop, critics in the market argue that Alutec’s public tender offer for KPTU is a case of private interest acquisition by the owner family under the pretense of enhancing shareholder value. There are calls for Alutec to repay the 3 billion won it owes to KPTU first, and for KPTU itself to repurchase its own shares directly. In fact, had KPTU bought back and canceled its treasury shares directly, Alutec’s expected shareholding ratio would drop to 68%, about 5.6% lower than after the public tender offer.

Moreover, despite KPTU currently facing a severe liquidity crunch, it has reportedly extended tens of billions of won in loans to affiliates of the owner family, including Alutec.

As of the end of the first quarter, KPTU held 15.4 billion won in current assets and 32 billion won in current liabilities, resulting in a current ratio of 48.1%. This means that money due for repayment within one year is more than twice the amount of assets that can be liquidated within the same period.

Nevertheless, KPTU currently has 7.5 billion won in loans extended to related parties, including Alutec. At a time when the company lacks resources to invest for performance improvement or to enhance shareholder value, it is instead funneling funds to its largest shareholder.

Regarding this, a KPTU representative stated, “Alutec raised the funds for this public tender offer through borrowing from elsewhere,” adding, “The 3 billion won previously loaned by KPTU is not being used as funding for this public tender offer.”

Another representative commented, “The effect of a share buyback is weaker than a public tender offer, and in a situation where there is no change to the business content, simply reducing the number of outstanding shares makes it more difficult to meet future market capitalization requirements. That is why we did not conduct a share buyback,” adding, “With KPTU’s current controlling share at 56%, unless it is for shareholder protection, there is no reason to further increase the shareholding ratio.”

This content was produced with the assistance of AI translation services.