Recent Developments

In connection with the acquisition of Ecorbit by IMM consortium from Taeyoung Group and Kohlberg Kravis Roberts (KKR), Lee & Ko acted as counsel to the lead arrangers Kiwoom Securities, NH Investment & Securities and Nonghyup Bank. Lee & Ko also advised and the lenders comprising of 40 domestic financial institutions in the same transaction which consisted of two parts: (i) a KRW 1,337.2 billion acquisition finance loan to the special purpose vehicles established by the IMM consortium which acted as buyers, and (ii) a KRW 370 billion loan to Ecorbit to repay the existing borrowings. Ecorbit is the foremost waste disposal company in Korea. 

The transaction, which was part of the workout process of Taeyoung Group, was one of the largest domestic M&A transactions in 2024 and attracted a lot of attention in the market. Lee & Ko provided extensive advice to the lenders from the bidding stage to the closing of the transaction, including drafting the loan agreements, negotiations with the lenders, and review of the loan closing documents, which were structured in two tranches: the first tranche consisting of an acquisition loan to the buyers and the second tranche loan to the target company to repay the existing loans. 

As the buyer in this case was established as two special purpose companies, Lee & Ko carefully analyzed the joint borrower structure and reflected it in the contract to ensure that the rights of the lenders were protected by the collateral agreed between the parties so as not to be different from a single borrower loan. In particular, Lee & Ko played a leading role in the negotiations, reconciling the sharply opposing commercial requirements of the parties and proposing appropriate alternatives, taking into account the special characteristics of the waste treatment industry, and promptly responding to the ever-changing transaction structure caused by various factors to support the successful closing of the transaction totaling KRW 1.7 trillion. 

Lee & Ko advised on the issuance of USD 1 billion by the Ministry of Strategy and Finance of foreign exchange stabilization bonds (FESB) in the U.S. in July 2024 and AUD 450 million of FESB in the Australia in December 2024.

As the interest rate of FESB is used as a benchmark for domestic companies and financial institutions in offshore bond issuance, the issuance of FESB is very important in the capital market. In particular, the issuance of USD 1 billion FESB was significant in that achieved it received the lowest mark-up rate in history, and that the Korean government established the status of a regular bond issuer by issuing dollar-denominated bonds after three years. 

In addition, the AUD 4.5 billion FESB is the first FESB ever issued in Australian Dollars and is seen as a diversification of the Korean government's funding sources. The stable subscription and issuance of the bond, despite the declaration of martial law shortly after the pricing, is particularly significant. Lee & Ko’s experts contributed to the success of the transaction by providing accurate and prompt advice in a volatile market. 

In addition to this transaction, Lee & Ko has advised a number of other large-scale bond issuances in the second half of 2024 alone, including Shinhan Card's AUD 300 million offshore bond, Kookmin Bank's EUR 500 million covered bond, Korea National Oil Corporation's USD 1.2 billion offshore bond, and Korea Gas Corporation's USD 500 million offshore bond.

Lee & Ko provided legal advice for a transaction (the "Transaction") involving the sale of all shares issued by Koryo Nobel Explosives Co., Ltd. (the "Target Company"), held by KNE Holdings Co., Ltd., an SPC managed by Eum Private Equity Co., Ltd. as its general partner.

On November 8, 2024, KNE Holdings Co., Ltd. entered into a share purchase agreement with Kiwoom Private Equity Inc., under which all shares issued by the Target Company were sold to Kiwoom Private Equity Inc. for KRW 217.3 billion. Kiwoom Private Equity Inc. established a fund to consummate the Transaction.

Lee & Ko has been advising Eum Private Equity Co., Ltd., the seller, since its acquisition of the Target Company. For the Transaction, Lee & Ko provided comprehensive legal services for the seller, including reviewing the transaction structure, responding to the buyer's due diligence, and negotiating and executing the share purchase agreement, contributing to the successful closing of the Transaction.

The merger transaction (the “Transaction”) between Sapion Korea, Inc. and Rebellions Inc. (the “Merger Agreement”), with Sapion Korea, Inc. as the surviving entity and Rebellions Inc. as the dissolving entity, was executed on August 20, 2024, and was consummated on December 1, 2024, designated as the effective date of the merger.

Sapion Korea, Inc. and Rebellions Inc. are leading players in the domestic AI semiconductor market. This merger was undertaken to establish a representative AI company in Korea and   enhance competitiveness in the global AI semiconductor industry. Notably, the Transaction was structured as a merger between unaffiliated companies—a relatively uncommon occurrence—requiring careful pre-transaction alignment of the parties’ interests, as the two entities would be integrated into a single organization following the closing of the Transaction.

Acting on behalf of Sapion Korea, Lee & Ko provided comprehensive legal support throughout the Transaction, including the design of the transaction structure, timeline management, and compliance with disclosure requirements. In particular, Lee& Ko provided effective and systematic legal advice on various matters arising during the Transaction, including drafting the merger agreement, negotiating with stakeholders, and preparing the shareholders’ agreement. Through these efforts, Lee & Ko contributed to the efficient and successful completion of the Transaction within a short timeframe.

The largest shareholder of JEIO Co., Ltd. (the “Target”), and ISU Petasys Co., Ltd. (the “Purchaser” or the “Acquirer”), entered into (i) a stock purchase agreement under which the Seller will sell to the Purchaser approximately 14.60% of the issued shares of the Target held by the Seller. Additionally, the Target and the Acquirer entered into (ii) a share subscription agreement pursuant to which the Target will issue to the Acquirer new shares representing approximately 13.86% of its issued shares, and (iii) a convertible bond subscription agreement under which the Target will issue to the Acquirer KRW 42 billion worth of ‘Series 2 Bearer Interest Unsecured Private Placement Convertible Bonds’, which can be converted into shares representing approximately 5.48% equity interest in the future. (The aforementioned percentages are calculated on the assumption that the new shares are issued and the convertible bonds are converted into shares.)

This transaction involves a structure whereby a listed company becomes the largest shareholder of another listed company. Simultaneous negotiations were conducted on multiple fronts, including the sale of existing shares, the issuance of new shares, and the issuance of convertible bonds. Due to the nature of a transaction between listed companies, intensive negotiations within a short period were required to maintain strict confidentiality, rendering the deal highly complex and challenging. Furthermore, this transaction was a landmark case where the largest shareholder was granted an exemption under the Korea Exchange (the “KRX”) rules to pursue an M&A transaction during the post-listing protection period, which is unprecedented in the past decade, and therefore, strategic planning and consultation with the KRX was critical.

Lee & Ko provided comprehensive and dedicated legal counsel throughout the entirety of this approximately KRW 300 billion transaction, including advising on the review of the transaction structure, drafting various agreements, negotiations, and facilitating their execution, thereby ensuring the successful execution of the series of agreements related to this transaction. Through such professional and effective counsel, the legal issues arising from the complex transaction structure and the unique characteristics of listed companies were successfully resolved, enabling the transaction agreements to be smoothly executed.

Lee & Ko successfully represented Company A, a food waste treatment company, in a lawsuit seeking to revoke excess effluent charges of approximately KRW 276.6 billion (approx. USD 200 million), securing a favorable ruling for the client.

Investigative authorities alleged that Company A, which had obtained a waste treatment business license and operated discharge facilities, illegally discharged wastewater by installing a bypass pipe in the food waste treatment process, allowing wastewater to flow out without passing through the final discharge point. Consequently, both Company A and its executives were indicted. Subsequently, relying entirely on the investigation's findings, the administrative authority imposed an unprecedented KRW 276.6 billion in excess effluent charges, alleging that Company A discharged water pollutants exceeding the permissible concentration limits. Meanwhile, Company A and its executives had already been convicted in the first instance of the related criminal case, which is currently under appeal.

Under the Water Environment Conservation Act, the amount of excess effluent charges is calculated based on the concentration level exceeding permissible limits, the volume of discharge, and the operational days. Lee & Ko meticulously analyzed the grounds for the administrative authority’s calculation of the charges and successfully argued and proved the following:
    1. The excess pollutant concentration level should have been calculated based on wastewater discharged after being combined with wastewater treated through the facility, not based on samples collected from the bypass pipe. The administrative authority’s reliance on samples from the bypass pipe was therefore unlawful.
    2. The volume of discharge used in the calculation was based on unreliable data, leading to errors.

This case is a landmark victory, overturning the largest charges ever imposed in Korea, showcasing the expertise and seasoned experience of Lee & Ko’s Environmental Group. Furthermore, the case serves as a powerful reminder that companies failing to prioritize environmental responsibility risk facing astronomical penalties. At the same time, it underscores the importance of regulatory sanctions to be imposed strictly in accordance with clear legal standards and procedures. 

Lee & Ko successfully obtained a ruling from the Seoul High Court that overturned all sanctions imposed by the Korea Fair Trade Commission (KFTC) against the Korean Bar Association and the Seoul Bar Association (collectively, the “Bar Associations”).

In this case, the KFTC determined that the Bar Associations had engaged in prohibited conduct for business associations under the Monopoly Regulation and Fair Trade Act (MRFTA). The Bar Associations requested attorneys that are members of the Bar Associations to cease using the legal platform Law Talk and took disciplinary action against members that continued to use the platform.

Through a review of case precedents and a systematic interpretation of the Constitution and relevant laws, such as the Commercial Code, the Civil Act, and the Attorney-at-Law Act, Lee & Ko successfully persuaded the court by arguing:

(i) The Bar Associations’ supervision and management of member attorneys are not subject to the MRFTA or the Fair Labeling and Advertising Act, and the KFTC does not have the jurisdiction to review the Bar Associations' disciplinary actions taken against members, as bar associations function in a manner similar to public corporations and are entrusted with public administrative duties; 

(ii) Unlike general goods and services markets, where price competition is encouraged, the legal market is regulated to ensure that only licensed attorneys can provide legal services, thereby preventing the involvement of commercial capital. Therefore, the Bar Associations, established under the Attorney-at-Law Act, are granted broad autonomy in managing and supervising attorney conduct, including regulating the scope of advertising on platforms; and

(iii) In South Korea, there is a significant need for regulatory oversight over the operation of online legal platforms, including Law Talk.

Law Talk, a first-generation legal platform in South Korea, has been involved in numerous disputes over the past decade regarding the scope of the Bar Associations' management and supervision, as well as the legality of the services it provides. In addition, it is highly likely that similar disputes will arise in the future concerning other legal tech businesses. This ruling is expected to contribute to recognizing the Bar Associations' broad autonomy in managing and supervising attorney conduct, and provide a foundation for protecting the public and the high ethical standards of the legal profession.

Through this decision, it is expected that legal tech guidelines, which are being developed by the Ministry of Justice, will be properly established to contribute to sound and sustainable growth and innovation in the legal tech industry within the framework of laws such as the Attorney-at-Law Act.
 

Lee & Ko successfully represented Company B in a lawsuit seeking to revoke a local government’s rejection of its proposal for a district management plan amendment to install a medical waste incineration facility. The court ruled in favor of Company B, overturning the local government’s decision.

The plaintiff, Company B, is a medical waste collection and transportation company. To establish the incineration facility, the company conducted a small-scale environmental impact assessment (EIA), which concluded that the project would have “no or minimal negative environmental impact.” Based on this, Company B received confirmation of compliance with the Waste Management Act from the Regional Environmental Office. Subsequently, the company submitted a proposal for a district management plan amendment under the Framework Act on the National Land to the local government. Despite the positive results of the EIA, the local government rejected the proposal, citing environmental concerns and opposition from local residents.

Lee & Ko advanced the following two compelling arguments.
    1. Rejecting the proposal solely based on opposition or vague concerns from residents without a reasonable and detailed review is unlawful.
    2. The administrative authority’s environmental concerns lacked objective and concrete evidence, failing to overturn the findings of the small-scale EIA.

The court accepted these arguments and annulled the local government’s rejection decision.

Although waste treatment facilities are essential infrastructure for the proper disposal of waste generated by the public, they are often viewed as undesirable due to their association with waste processing. Establishing such facilities requires not only approval from the Regional Environmental Office but also administrative planning approval from the local government where the facility will be located. Administrative planning, such as district management plans, involves broad discretion on the part of local authorities, making it particularly challenging to argue and prove abuse or overreach of that discretion.

This case establishes an important precedent by overturning an unlawful administrative decision aimed at blocking the installation of a waste treatment facility due to local opposition. It serves as a positive example for businesses pursuing essential infrastructure projects while complying with environmental protection measures and adhering to EIA requirements.

Lee & Ko provided legal advice on a transaction in which SK On Co., Ltd. issued new shares worth approximately KRW 1 trillion to financial investors (FIs), including Korea Investment & Securities, Shinhan Bank, Shinhan Securities, and KB Securities. This transaction was completed through a share price return swap (PRS) concluded between the FI investors and SK On’s largest shareholder, SK Innovation Co., Ltd., regarding the newly issued shares acquired by the FI investors.

This transaction drew significant market attention due to several factors: ① the issuance of new shares and the related derivative transaction based on the new shares were interconnected, ② major domestic financial institutions participated as investors, and ③ the scale of the new share issuance by SK On, amounting to approximately KRW 1 trillion, made it one of the largest deals in terms of new investment attraction. The transaction was considered pivotal for SK On, as it enabled the company to secure substantial capital, laying a foundation for the continuous growth of its battery business.

Lee & Ko provided advice throughout the entire process, from reviewing the transaction structure to negotiating and executing the relevant contracts. Despite the complexity of the transaction, which involved various issues under the Commercial Act and the Capital Markets Act, as well as negotiations with multiple FIs, the firm successfully provided timely advice that ensured the swift and efficient completion of the transaction.