Courtesy of Lee Soo-man

A courtroom in Seoul on Friday blocked a proposed transfer to challenge new shares in K-pop expertise company SM Entertainment to Korean tech large Kakao Corp. and its Kakao Entertainment subsidiary.

An injunction was sought by Lee Soo-man, one of many pioneers of the Korean modern music business, however who’s lately on the middle of a storm of controversy.

Lee, who has fallen out together with his firm’s present administration workforce, introduced initially of February his plans to promote a 14.8% stake in SM to HYBE Corp., the agency behind hit group BTS and a rival to SM.

It then emerged that SM’s administration was proposing to challenge new shares to the Kakao pair, giving them a 9.05% holding, and signal an unique distribution contract. The share stake would make Kakao the second largest shareholder within the agency after HYBE and dilute its affect.

HYBE mentioned lately that it had paid for the initial tranche of shares and that it expects to purchase Lee’s remaining 3.6% stake. It can even make an open supply to all shareholders for an extra 25% of the corporate.

The Seoul Eastern District Court on Friday accepted Lee’s utility for an injunction on the share challenge and sale to Kakao. But it didn’t publish its causes.

However, a letter from Yang & Yang, a regulation agency representing Lee, and seen by Variety, learn: “The Court did not accept that SM has a compelling need for financing. Further, it opined that at the stage of merely drawing up a business strategy for the strategic alliance with Kakao, SM was not in a situation to raise funds worth around KRW 217 billion by issuing new shares and convertible bonds to Kakao in disregard of the preemptive rights of the existing shareholders. [..] the resolution by SM’s current management to issue new shares, etc. appears to have stemmed from their intent to weaken the largest shareholder’s control.”

The letter additionally warned that if the present administration makes an attempt different technique of redistributing management additional authorized actions would comply with.

SM’s present administration has accused Lee of unlawful monetary actions and collaboration with Hybe towards his personal firm.

Some 208 workers signed an open letter final month that labelled Lee’s actions as unlawful. “Once former chief producer Lee Soo Man was in danger of having his illegal tax evading actions unveiled, he sold his shares to a competitor company that he used to speak ill of and ran away,” they mentioned.

Both HYBE and SM have launched campaigns to win over other minority shareholders forward of an traders’ assembly on the finish of March.