SM Entertainment Considering Closing SMTOWN Coex Artium + Other Business Changes

SM Entertainment has stated that they are considering changes to their shareholder return policies and are reviewing whether they should close down businesses that are incurring losses.

On July 31, SM Entertainment replied to a letter from one of their major shareholders, KB Asset Management. On June 5, KB Asset Management had sent a letter to SM Entertainment requesting a merger with Lee Soo Man’s personal company, a dividend payout ratio of 30 percent, and a reorganization of businesses that are incurring losses.

SM Entertainment has never paid a dividend since the company went public. The agency stated, “We did not implement our dividend policy because we focused on investing for the growth and future of our company. Those goals remain the same today.”

However, the company continued, “We are aware that there are growing demands among the shareholders, so we will review plans that can balance reinvestment for the growth and future of the company with shareholder returns of company profit. For example, we will consider methods like distribution of profits or buying back shares. When we have decided upon a concrete plan, we will let you know in detail.”

SM Entertainment also added, “After receiving a letter from the shareholders requesting that we reorganize the businesses that are incurring losses, we are considering whether or not to close down SMTOWN Coex Artium.”

SMTOWN Coex Artium opened in 2015 and has become a tourist destination for K-pop fans, particularly of SM Entertainment artists. The building includes a café, museum, theater, and store where fans can purchase merchandise.

However, SM Entertainment drew the line at merging with Lee Soo Man’s personal company, Like Planning. They stated, “Like Planning is not an incorporated business, so merging with the company is not a valid plan from a legal perspective. Moreover, the shareholders do not have the right to enforce such a measure.”

“However, we are currently holding close consultations and careful review in order to maintain the basis of our company’s competitiveness and to operate our production in a progressive manner.”

KB Asset Management had requested the merger with Like Planning after claiming that SM Entertainment was paying royalties that amounted to 46 percent of SM’s business profits to Like Planning, which Lee Soo Man owns 100 percent. KB Asset Management claimed that these royalties paid to Like Planning were creating a conflict of interest with the minority shareholders.

Based on a recent disclosure of interests, KB Asset Management currently owns 7.59 percent shares in SM Entertainment.

Meanwhile, SM Entertainment and SM C&C recently announced a change in co-CEOs.

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