[비즈한국] Min Hee-jin, CEO of OK Records (former CEO of ADOR), has won a legal battle against HYBE352820. CEO Min had exercised a put option on her ADOR stake, but filed a lawsuit after HYBE rejected it on the grounds that the shareholder agreement had been terminated. With the court ruling in favor of CEO Min, HYBE is now required to purchase her stake in ADOR for 25.5 billion won. This sum represents a significant amount, equivalent to half of HYBE's operating profit from last year. HYBE has announced its intention to appeal.
According to audit reports, CEO Min Hee-jin held an 18% stake in ADOR as of the end of 2024. CEO Min had entered into a put option agreement with HYBE regarding this stake. If CEO Min exercises the put option, she is entitled to receive an amount from HYBE equal to 75% of her shareholding multiplied by 13 times the average operating profit of ADOR over the preceding two years. Based on this calculation, the value of CEO Min's ADOR shares is approximately 26 billion won.
CEO Min Hee-jin notified HYBE of her intent to exercise the put option upon leaving ADOR in November 2024. However, HYBE argued that she had no right to the put option because she had violated the shareholder agreement. In July 2024, HYBE decided to terminate the shareholder agreement, claiming that CEO Min had attempted to privatize ADOR and NewJeans. Consequently, they argued, the validity of the put option also vanished. Conversely, CEO Min countered that the termination notice by HYBE was ineffective because there was no actual breach of the shareholder agreement. Ultimately, the dispute between CEO Min and HYBE escalated into a legal battle.
The first-instance ruling went to CEO Min Hee-jin. On the 12th, the Seoul Central District Court ruled that HYBE must pay 25.5 billion won to CEO Min for the purchase of her ADOR shares. At the same time, HYBE's lawsuit seeking confirmation of the termination of the shareholder agreement was dismissed. The court stated, "While it is acknowledged that CEO Min sought ways to make ADOR independent from HYBE, that fact alone does not constitute a material breach of the shareholder agreement."
CEO Min Hee-jin’s OK Records stated, "We express our deepest respect to the court for its careful and objective judgment," adding, "We respect and humbly accept the court's decision, which confirms the validity of the shareholder agreement and the legitimacy of the put option rights through this ruling."
For HYBE, acquiring an additional 18% stake in ADOR will not significantly impact their control, as they already own 80%. The possibility of the value of the ADOR stake declining in the future cannot be ruled out. ADOR recorded over 100 billion won in revenue in both 2023 and 2024. However, as the dispute between CEO Min Hee-jin and HYBE unfolded, NewJeans' activities were suspended, and ADOR's revenue dropped sharply. ADOR's revenue for the first three quarters of last year was 24.4 billion won. If poor performance continues this year, the value of the stake is also expected to decline.
If the value of ADOR's shares falls, it will ultimately be reflected as a loss for HYBE. Furthermore, 25.5 billion won is by no means a small sum for HYBE. HYBE's operating profit last year was 49.9 billion won. 25.5 billion won accounts for half of HYBE's annual operating profit.
It is generally evaluated that ADOR's performance depends on NewJeans. After the conflict between CEO Min Hee-jin and HYBE in 2024, NewJeans left ADOR following CEO Min, but expressed their intention to return at the end of last year. Three members—Haerin, Hyein, and Hanni—have completed their return. Discussions are currently underway with Minji, and ADOR has expressed its intent to refuse the return of Danielle. A specific comeback schedule has not yet been released. Even if NewJeans does make a comeback, their recovery of popularity cannot be guaranteed, as they have gone through significant turmoil.
Last year, ADOR held global auditions to launch a boy group. If the boy group debuts successfully, the revenue structure currently concentrated on NewJeans could be diversified. However, the specific plans for the boy group have not yet been revealed.
For this reason, even though acquiring the 18% stake in ADOR provides little tangible benefit, HYBE cannot refuse to comply with the court's ruling. However, as HYBE has announced its intention to appeal, it is expected that a final decision will take time. HYBE has appointed the law firm DaeHwan, and CEO Min Hee-jin has appointed the law firm Sejong as their respective legal counsel; whether there will be any changes in legal representation remains a point of interest.
A HYBE representative stated, "It is regrettable that our claims were not fully accepted," adding, "We plan to proceed with future legal steps, including an appeal, after reviewing the court ruling."