[OTK Company and Seosung SB Establish Joint Venture TS Company!]
[Announcing Plans to Build a Battery Factory in the Rust Belt!]
[Expected to Produce 40GWh of Lithium-Ion Batteries Annually Upon Completion.]
[The Largest Investnt in the Battery Industry!]
The impact of the press conference was evident. Articles flooded the portal sites imdiately.
The joint venture was nad TS Company, derived from the T of OTK Company and the S of Seosung.
The main reason for proposing the joint venture was equity. Currently, we hold an 11 percent stake in Seosung SB.
However, by creating a joint venture, we would secure 70 percent of the shares according to the investnt ratio. Adding Seosung SB’s stake would bring our total to 73 percent.
Vice Chairman Im Jin-yong actively agreed to this proposal.
In the situation where he hadn’t fully taken control of Seosung Group, losing Seosung SB to his younger brother could raise questions about his abilities.
He needed a card that could change the atmosphere.
The joint venture requires less investnt and helps distribute risks. Since Seosung SB only needs to invest 30 percent, it can easily be funded through the sale of its own shares.
Another reason was pressure from the United States. Ronald had advocated for Arica First since his candidacy.
After taking office, he openly pressured companies to establish factories in the U.S. and hire Aricans if they wanted to sell products in the U.S.
This applied not just to cars, but to all manufacturing sectors.
While Seosung Electronics and CL Electronics sold enormous amounts of ho appliances in the U.S., they had no factories there, producing everything in xico for export.
The Arican appliance company Whirlpool, a competitor, requested the governnt to implent safeguards due to the serious damage it faced from these two companies.
In previous administrations, such concerns would have gone unheard, but this president was different.
Ronald threatened to initiate safeguards, claiming Seosung Electronics and CL Electronics were inflicting significant harm on Arican companies.
To avoid penalties, they had to at least pretend to be complying, which put them in a position to consider relocating factories.
However, fortuitously partnering with OTK Company to establish a battery factory could provide so freedom from the pressure of trade issues.
***
President Ronald, as if he had been waiting for this mont, linked the article and tweeted consecutively.
– “Arican manufacturing is rebounding! Thank you, OTK Company! Thank you, Seosung!”
– “All companies exporting to the U.S. should take a lesson from OTK Company and Seosung.”
– “In the future, there will be more factories established in the U.S. and more jobs created.”
In the end, he added a small boast, claiming that all of this would have been impossible if he had not beco president.
This announcent put Im Seung-yong in a difficult position. He was pursuing cooperation with Eunsung Motors, but suddenly Seosung SB announced a joint venture with OTK Company, getting ahead.
In a situation where even the U.S. president was celebrating on social dia, how could he say, “If I beco the CEO, I will cancel the joint venture and U.S. factory, and only work with Eunsung Motors”?
So dia outlets expressed negative opinions on behalf of Im Seung-yong, who couldn’t speak out directly. Among them, the column from Joongilbo was particularly striking.
[Is There a Solution for Battery Oversupply?]
…Seosung SB is still facing battery certification refusals in China, with factory operation rates hovering at 70%. Last year, the demand for electric vehicle batteries in the Chinese market was 25 GWh, while production reached 100 GWh—a fourfold excess. Furthermore, in the global market, the oversupply rate for electric vehicle batteries has already exceeded 150%, leading to intense competition among companies.
However, the continuous decline in oil prices is gradually reducing the appeal of electric vehicles, and demand for vehicle batteries is also stagnating. If governnt support decreases under these conditions, the entire industry will face hardship.
Now is not the ti to be dazzled by rosy prospects; we must confront the harsh reality.
We announced the establishnt of the joint venture on a Friday afternoon when the market closed, so it had not yet been reflected in stock prices.
Shareholders were divided in their judgnt.
– “Is the establishnt of the joint venture a positive or negative developnt?”
– “For now, it’s positive.”
– “What? We can’t even sell the batteries we’ve made.”
– “If the oversupply problem isn’t resolved even after the factory is completed, it will be a big issue.”
– “Battery factories are being built all over China; there will be backlash in a few years.”
“Taek-gyu put down the newspaper and said,
‘Don’t be dazzled by rosy prospects; look at the harsh reality.’”
That’s a very good point.
No matter how hard you invest and increase production, if demand doesn’t keep up, you’ll just run out of space to store the excess inventory.
I nodded.
“I was actually trying to show what that harsh reality is.”
***
The next day.
At the Ceylon Hotel, CEO Daryl of CarOS and Vice Chairman Im Jin-yong of Seosung Group signed a business agreent and shook hands.
This was the first ti Vice Chairman Im appeared in public since the funeral of Chairman Im Il-Kwon.
“We have decided that Seosung Electronics and CarOS will collaborate from the developnt stage across all areas, including motors, AP, sensors, and car infotainnt. Additionally, we have contracted that CarOS will purchase all the batteries produced by the joint venture TS Company over the next five years.”
The reaction ca swiftly.
– Look at Jin-yong’s drive.
– After acquiring Herman, he’s diving into the automotive electronics business. Is he pushing forward with a dual track of electronics and SB?
– But if Im Jin-yong gets pushed out from being CEO of Seosung SB, won’t that disrupt the investnt plans?
– To break past the previous peak, we must absolutely back our Jin-yong!
– Let’s go, Jin-dragon!
Saying they would buy up all the production for five years ant, in effect, that CarOS was taking on the risk.
Naturally, this was a contract heavily favorable to Seosung SB. With a stable buyer secured, there was no need to worry about oversupply.
As soon as the market opened on Monday, Seosung SB’s stock price soared, breaking through previous highs and hitting the upper limit. Seosung Electronics’ stock also rose nearly 5%, reaching an all-ti high of 2.61 million won.
Foreign investors, institutions, and small shareholders all shifted their support to Im Jin-yong.
The allegations of embezzlent against President Lee Su-hak faded away.
Those who had criticized him days earlier for selling shares at a low price suddenly changed their tune and praised the sale as a brilliant move.
Even the National Pension Service, which had increased its stake to 19% by buying at the peak, found itself being comnded for its investnt.
With this, the National Pension Service had no grounds to oppose Im Jin-yong.
President ParkSi-hyeong’s remarks urging active exercise of voting rights effectively ant supporting Im Jin-yong.
At this point, the shareholders’ eting was a foregone conclusion.
As the trend completely shifted, Im Seung-yong announced that he would not take on the position of CEO, and Im Jin-yong was appointed as the CEO of Seosung SB with everyone’s support.
***
After wrapping up the work, I spoke with Vice Chairman Im Jin-yong.
“Thank you for all your hard work, sir.”
[It’s all thanks to your efforts.]
The establishnt of the joint venture was progressing smoothly.
The TS Company factory is planned to be built in the Rust Belt, a region where Ronald’s support base is concentrated, ensuring solid backing.
As expected, the governors of Pennsylvania, Michigan, Wisconsin, Illinois, and Indiana, all located in the Rust Belt, promised land offers, tax benefits, and various conveniences to attract the factory.
[A fun announcent will co soon.]
“What is it?”
[You’ll find out soon.]
After exchanging greetings, I hung up.
Although the project ended well, I wasn’t sure if I should be happy.
I invested 2.8 trillion won to acquire an 11% stake in Seosung SB, and the establishnt of the joint venture is set to cost $3.5 billion.
Fortunately, I won’t spend the $3.5 billion all at once; initially, I will contribute $500 million, with the remainder invested in phases according to the plan.
Once the investnt is made, there won’t be much cash left.
Thinking about this, I began to feel the pressure mounting. I had many projects on the go that would require funds from all directions, but the actual inco was low.
Companies can go bankrupt from a lack of investnt, or they can fail from over-investing.
Nikola, which introduced the Model P in 2009, was hailed as a revolution in the automotive industry. After successfully launching the Model A and Model B, its market valuation grew to rival GM, even as it started as just a startup.
However, Nikola has never made a profit since its founding. The cumulative deficit has reached $1 billion.
Without continued equity increases and bond issuances, it would have gone bankrupt long ago.
High-end cars priced over $100,000 have limited demand, making it hard to earn substantial profits. Hence, Nikola used the recognition and technology gained from the Model A and Model B to develop the mid-range sedan model TH, which generated great excitent with over 500,000 pre-orders.
Despite this, the reason the deficit isn’t decreasing is that production volu isn’t sufficient. What good is high demand if you can’t et it?
Last year, only 67,000 units were produced. Even though the profit margin per unit is large, it’s a modest result compared to Eunsung Motors, which produces over 800,000 units annually.
Nikola’s CEO, Allen Everhart, announced plans to increase production to 150,000 units this year, but prevailing expectations suggest that will be challenging.
We are taking the opposite approach from Nikola. We are building our production facility before even launching a new car.
This way, at least we won’t suffer the production hell that Nikola is experiencing.
However, the problem is that money is running out faster than expected. There are ways to raise funds, like bank loans, bond issuances, or an IPO, but the psychological burden is unavoidable.
“What if our cars don’t sell and we really end up failing?”
“Who knows?”
When you think about it, we’ve poured over 30 trillion won into the auto business.
If the new car doesn’t sell as expected, it could lead to significant losses. In the worst-case scenario, we could face bankruptcy.
“We have to make sure that doesn’t happen.”
***
The succession of managent rights in the Seosung Group had been ongoing even before Chairman Im Il-kwon collapsed.
The process is nothing short of a comprehensive mix of illegal and dubious thods.
Im Il-kwon facilitated Im Jin-yong’s purchase of unlisted shares in DS and Seosung Life at a bargain, and then listed them. He funneled business opportunities within the group to companies where his son held significant stakes.
Convertible bonds were even utilized in this process.
Seosung SDL issued convertible bonds amounting to 60 percent of its shares at a ridiculously low price. Existing shareholders with preferential rights all opted out of purchasing them. Given the significantly lower price than market value, competition to acquire even a bit more would be expected. Ultimately, however, Im Jin-yong purchased the entire batch of bonds that no one else paid any attention to.
These convertible bonds were imdiately converted to Seosung SDL stock, which was then rged into Seosung Mulsan. Im Jin-yong ascended to beco the largest shareholder of the group’s holding company, Seosung Mulsan.
Thanks to various illegal and improvised actions, Im Jin-yong managed to acquire control of the Seosung Group, valued at 400 trillion won, paying only a few billion won in taxes.
Finally, Im Jin-yong was elected as the group chairman by a unanimous vote of the board. Until then, he had been acting as the king, but now he had formally ascended the throne.
After a while, news of interest arrived.
[Seosung Heavy Industries Board, Proposal to Dismiss CEO Presented to Shareholders eting!]
[Im Seung-yong’s Dismissal as CEO of Seosung Engineering Confird!]
By whatever ans possible, Im Jin-yong took control of the boards of Seosung Heavy Industries and Seosung Engineering to propose Im Seung-yong’s dismissal.
Im Seung-yong naturally resisted, but support for Im Jin-yong ca not only from foreign investors and institutions but also from small shareholders, making it impossible for him to defend solely with his stake.
Ultimately, the dismissal proposal passed, and Im Seung-yong stepped down from the presidency of both companies.
But that wasn’t the end.
Im Jin-yong purged everyone associated with the Yeon-so Hyun and Im Seung-yong factions within all subsidiaries, filling those positions with his own people.
In other words, he completely ousted his mother and brother from the group.
Taek-gyu remarked in shock, “He was too greedy for Seosung SB and ended up losing even his own shares.”
It was essentially a purge, albeit without any bloodshed.
“What’s going to happen with these two?”
“Well, they should have at least a few trillion in assets, so they won’t starve anywhere.”
But without managent rights, they’re just individual shareholders with a lot of stock. They could live off dividends for life, but it would be hard for them to show their faces in the business world anymore.
“Is it okay to do this to Mom and my brother?”
“They say power is not sothing you share, even with family.”
There are plenty of such cases abroad.
Mike Goldenberg, CEO of FaceNote, ousted a partner with differing views and reached a settlent after a legal dispute, while Nikola CEO Allen Everbach also expelled co-founders to take their place.
Thinking back…
What if we had split our shares in OTK Company equally, as we initially discussed? Wouldn’t it be strange if Taek-gyu and I ended up fighting to kick each other out of the company?
I sat up and said,
“Let’s go have a beer. How about chicken and beer?”
Taek-gyu nodded.
“Sounds good. I should also call my noona.”
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