Background
and Plan of Merger(Revise)
|
1.
Relevant
Disclosure
|
Background
and Plan of Merger
|
|
2.
Date of
Relevant Disclosure
|
April 26,
2010
|
|
3.
Reason of
Revise
|
Amendment to
date of Merger timeline
|
|
4.
Revised
Item
|
|
Item
|
After
Amendment
|
Before
Amendment
|
|
Webzen
Inc.
|
Webzen
Inc.
|
|
Resolution of
Board of Directors Approving the Merger
|
2010-04-15
|
2010-04-15
|
|
Date of the
Merger Agreement
|
2010-04-15
|
2010-04-15
|
|
Determination
of Shareholders for General Shareholders Meeting on Merger
|
2010-05-06
|
2010-05-06
|
|
General
Shareholders Meeting for Approval of Merger
|
2010-06-04
|
2010-05-28
|
|
Term for
Exercising Appraisal Rights of Objecting Shareholders
|
Commencement
|
2010-06-05
|
2010-05-29
|
|
Termination
|
2010-06-25
|
2010-06-17
|
|
Date of
Merger
|
2010-07-07
|
2010-07-01
|
|
General
Assembly for Merger Completion Report
|
2010-07-08
|
2010-07-02
|
|
Announcement
of Merger Completion Report
|
2010-07-09
|
2010-07-03
|
|
Announcement
of Closure of Shareholder List
|
2010-04-20
|
2010-04-20
|
|
Period of
Closure of Shareholder List
|
Commencement
|
2010-05-07
|
2010-05-07
|
|
Termination
|
2010-05-11
|
2010-05-11
|
|
Period of
Prior Notice of Shareholders Objecting to the Merger
|
Commencement
|
2010-05-19
|
2010-05-13
|
|
Termination
|
2010-06-03
|
2010-05-27
|
|
Announcement
of Submission of Objections by Creditors
|
2010-06-05
|
2010-05-29
|
|
Period of
Submission of Objections by Creditors
|
Commencement
|
2010-06-06
|
2010-05-30
|
|
Termination
|
2010-07-06
|
2010-06-30
|
|
Period of
Submission of Old Shares
|
Commencement
|
-
|
|
|
Termination
|
-
|
|
|
Expected Date
of Merger Registration
|
2010-07-12
|
2010-07-05
|
|
Expected Date
of Issuance
|
2010-08-05
|
2010-07-19
|
|
Expected Date
of Listing New Shares
|
2010-08-06
|
2010-07-20
|
Background
and Plan of Merger(Revise)
Ⅰ
. Purpose
of Report
Merger decision
Ⅱ
. Reported
Contents
Section
1 Basic Merger Items
|
A.
|
Overview
of the Parties to the Merger
|
|
(1)
|
Parties
to the Merger
|
|
Surviving
Corporation After Merger
|
|
Name of
Corporation
|
Webzen Inc.
(“Webzen”)
|
|
Address
|
14Fl. Daerung
Post Tower 2
nd
,
182-13 Guro-dong, Guro-gu, Seoul
|
|
Representative
Director
|
Chang Keun
Kim
|
|
Corporate
Category
|
KOSDAQ Listed
Corporation
|
|
After
Merger
|
Surviving
Corporation
|
|
Dissolving
Corporation After Merger
|
|
Name of
Corporation
|
NHN Games
Co., Ltd. (“NHN Games”)
|
|
Address
|
13Fl. Daerung
Post Tower 2
nd
,
182-13 Guro-dong, Guro-gu, Seoul
|
|
Representative
Director
|
Byoung Gwan
Kim
|
|
Corporate
Category
|
Unlisted
Corporation
|
|
After
Merger
|
Dissolving
Corporation
|
(2)
Background of Merger
By merging with NHN
Games, a company in possession of verified game development capabilities and
profitability, Webzen hopes to enhance its game service portfolio, expand its
publishing business and promote efficient development of online games by sharing
R&D resources and integrating the operational networks of the parties to the
merger. Ultimately, this is expected to enhance the management efficiency and
the competitiveness of the two companies, as well as increase the synergistic
effect between the two companies, thereby increasing Webzen’s share
value.
B.
Impact on Corporate Management, Finances, and Operations
(1)
Impact on Corporate Management
As of the date of
submission of the Report on Important Items in Korea, the largest shareholder of
Webzen is NHN Games. The largest shareholder of NHN Games is NHN Corporation.
The dissolving corporation is a subsidiary of NHN Corporation. Upon completion
of this merger, Webzen will remain as the surviving corporation and its largest
shareholder will change from NHN Games to NHN Corporation.
(2)
Effects on Finance and Operations
As of the date of
submission of the Report on Important Items in Korea, Webzen has developed
online games such as ‘MU’ and ‘SUN’ and is providing commercial service and
preparing for the open beta testing and commercialization of the new game
‘Huxley’ and the FPS game ‘BATTERY’ via publishing contract. NHN Games is a
company specializing in the development of online games such as ‘R2’,
‘Archlord’, ‘C9’, and ‘BATTERY’.
Webzen seeks to
enhance its capabilities in new games development by procuring the game
development capacities of NHN Games, and is regarding this as an opportunity to
expand its weak portfolio in the publishing business.
Also, Webzen
expects to achieve significant financial synergies through the reduction of
overhead cost such as salaries and network costs, and diversification of profit
sources, which will in turn help maximize its profitability.
C.
Listing Plan
As of the date of
submission of the Report on Important Items in Korea, Webzen, the surviving
corporation, is listed on KRX KOSDAQ Market (“KOSDAQ”) and does not have plans
to delist after the merger. In a merger between a listed corporation and a
unlisted corporation, pursuant to KOSDAQ Market Listing Rules and other relevant
Korean law, a merger will be deemed an “indirect listing” if either (i) two or
more of the total assets, capital, and sales as per the financial statements of
the unlisted corporation for the fiscal year immediately preceding the fiscal
year of the date of submission of the Report on Important Items in Korea, are
greater than that of the listed corporation or (ii) the largest shareholder of
the surviving corporation changes upon completion of merger. This merger was
deemed a case of “indirect listing” since the largest shareholder will change
from NHN Games to NHN Corporation.
At market closing
on April 15, 2010, Korea Exchange (“KRX”), which operates KOSDAQ on which Webzen
is listed, suspended the trading of Webzen’s common shares for one day while
reviewing the merger in relation to the indirect listing rules. At market
closing on April 16, 2010, KRX cleared the issues and lifted Webzen’s common
share trading suspension.
D.
Other Relevant Matters Regarding the Method of Merger
In order for Webzen
to conduct a merger, a merger agreement must be drafted and approved by the
general shareholders meetings of both the surviving corporation and the
dissolving corporation. With regards to notification and announcement of
convening the general shareholders meeting, notification to shareholders in
possession of 1 percent or less of the issued shares with voting rights can be
substituted by announcing through the electronic announcement system (“DART”)
operated by the Financial Supervisory Service or KRX at least 2 weeks before the
date of the shareholders meeting as per Article 542-4 of the Commercial
Code.
2.
Form of Merger
A.
Method of Merger
NHN Games will
merge with and into Webzen. Although two or more of the total assets, capital,
and sales as per the financial statements of the unlisted corporation for the
fiscal year immediately preceding the fiscal year of the date of submission of
the Report on Important Items in Korea, was not greater than that of the listed
corporation, this merger is still deemed a “indirect listing” under article 19
paragraph 1 of the KOSDAQ Listing Regulations Enforcement Details since the
largest shareholder of the surviving corporation will change upon completion of
the merger.
|
Relevant
Regulations
|
|
KOSDAQ
Listing Regulations Enforcement Details Article 19 Paragraph 1 Item
2
When the
largest shareholder etc., of said unlisted corporation becomes the largest
shareholder of the KOSDAQ listed corporation through the merger (refers to
cases of becoming the largest shareholder according to the merger ratio of
the report on important items)
KOSDAQ
Listing Regulations Enforcement Details Article 19 Paragraph 1 Item
3
When the sum
of the number of shares of the KOSDAQ listed corporation held by the
largest shareholder etc., and shareholders with 5% or more of the shares
of the unlisted corporation as of the date of submission of the report on
important items and the number of new shares of the listed corporation
that are to be issued through the merger is greater than the shares of the
KOSDAQ listed corporation held by its largest shareholders etc.(including
new shares to be issued to said shareholder upon merger), as of the date
of submission of the report on important items. However, this does not
apply when the largest shareholder etc., and shareholders with 5% or more
of the shares of the unlisted corporation become the largest shareholder
of the KOSDAQ listed corporation at least one year prior to the date of
submission of the report on important
items.
|
B.
Whether this is a case of small scale merger or simplified merger
This merger is not
governed by Article 527-2(simplified merger) or Article 527-3(small scale
merger) of the Commercial Code.
C.
Listing Status of Surviving Corporation after Merger
Webzen, the
surviving corporation, is a KOSDAQ listed corporation as of the date of
submission of the Report on Important Items in Korea, and there are no plans to
delist after the merger.
3.
Progress and Schedule
A.
Important progress before signing of contract or resolution by board of
directors.
(1)
External evaluation contract for the evaluation of merger value
An external
evaluation contract was signed on March 29
th
, 2010
with Deloitte Anjin Accounting Firm (“Deloitte”), which is a member of Deloitte
Touche Tohmatsu. Under the contract, Deloitte was engaged to verify the
appropriateness of the merger value and stock exchange ratio pursuant to Article
176-5 of the Enforcement Decree. Such evaluation was conducted from March
29
th
, 2010
to April 14
th
, 2010
and Deloitte issued a report confirming the appropriateness of the merger value
and stock exchange ratio on April 14
th
,
2010.
(
2) Date of resolution of board of
directors for decision on merger
: April 15
th
,
2010.
(3) Date of Merger Agreement:
April 15
th
,
2010.
B.
Merger Timeline
|
Item
|
Webzen
Inc.
|
NHN Games
Co., Ltd.
|
|
Resolution of
Board of Directors Approving the Merger
|
2010-04-15
|
2010-04-15
|
|
Date of the
Merger Agreement
|
2010-04-15
|
2010-04-15
|
|
Determination
of Shareholders for General Shareholders Meeting on Merger
|
2010-05-06
|
2010-05-06
|
|
General
Shareholders Meeting for Approval of Merger
|
2010-06-04
|
2010-05-28
|
|
Term for
Exercising Appraisal Rights of Objecting Shareholders
|
Commencement
|
2010-06-05
|
2010-05-29
|
|
Termination
|
2010-06-25
|
2010-06-17
|
|
Date of
Merger
|
2010-07-07
|
2010-07-07
|
|
General
Assembly for Merger Completion Report
|
2010-07-08
|
2010-07-08
|
|
Announcement
of Merger Completion Report
|
2010-07-09
|
2010-07-09
|
|
Other
Schedule
|
|
Announcement
of Closure of Shareholder List
|
2010-04-20
|
2010-04-20
|
|
Period of
Closure of Shareholder List
|
Commencement
|
2010-05-07
|
2010-05-07
|
|
Termination
|
2010-05-11
|
2010-05-11
|
|
Period of
Prior Notice of Shareholders Objecting to the Merger
|
Commencement
|
2010-05-19
|
2010-05-13
|
|
Termination
|
2010-06-03
|
2010-05-27
|
|
Announcement
of Submission of Objections by Creditors
|
2010-06-05
|
2010-05-29
|
|
Period of
Submission of Objections by Creditors
|
Commencement
|
2010-06-06
|
2010-05-30
|
|
Termination
|
2010-07-06
|
2010-06-30
|
|
Period of
Submission of Old Shares
|
Commencement
|
-
|
2010-05-30
|
|
Termination
|
-
|
2010-06-30
|
|
Expected Date
of Merger Registration
|
2010-07-12
|
|
|
Expected Date
of Issuance
|
2010-08-05
|
|
|
Expected Date
of Listing New Shares
|
2010-08-06
|
|
Note 1) The
aforementioned schedule contains expected dates as of the day of announcement
and is subject to change due to the amendment of related laws, consultation and
authorization processes of the relevant agencies, satisfaction of conditions
preceding the merger or other relevant circumstances.
Note 2) The general
assembly for merger completion report shall be replaced by the newspaper notice
per resolution of the board of directors.
4.
Conditions for Consummation of Merger
A.
Termination Conditions of the Merger Agreement
The termination
conditions of Article 13 of the merger agreement are as follows;
|
Article 13.
TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger by any party (except by the party in
violation of this Agreement):
(a) by mutual
written consent of WEBZEN and NHN Games; or
(b) if there
are any insolvency, dissolution, liquidation, bankruptcy or work-out
procedures of, or application for such procedures by, either WEBZEN or NHN
Games; or
(c) if the
approval of the shareholders of WEBZEN and/or NHN Games regarding the
Merger has not been obtained in the three months period after the
shareholder list closing date; or
(d) if the
consummation of the Merger becomes illegal or impossible, due to any
changes in the relevant laws or government regulations, and no agreement
between WEBZEN and NHN Games is forthcoming in 30 days since such changes
became effective; or
(e) if a
party breaches the Agreement and does not remedy in 30 days after its
receipt of the other party’s written request for remedy; or
(f) if the
total amount of appraisal rights exercised exceeds KRW 30,000,000,000;
or
(g) if any
change that will have a material adverse impact on the finance, operation,
sales and prospects of either WEBZEN or NHN Games occurs.
In the event
of termination of this Agreement, this Agreement and all related
transactions shall retroactively become void and null except for the
liabilities already incurred.
|
B.
Possibility of Merger being voided at the General Shareholders Meeting for
Approval
Merger may be
voided if the approval of two-thirds or more of the attending shareholders and
one-third or more of the total issued shares is not received at the special
general shareholders meeting convened for the approval of this merger. This
requirement applies to both the surviving corporation and the dissolving
corporation.
C.
Regulations or Special Provisions of Related Laws
Any required
authorization, licenses, or acceptance of reports of governmental agencies must
be received by the day before the date of the merger. Otherwise this merger may
be nullified.
Section
2 Merger Value and Calculation Formula
1.
Merger Value
A.
Merger Ratio
The merger of the
KOSDAQ-listed Webzen,(hereinafter referred to as “surviving corporation”) and
NHN Games, the unlisted corporation, (hereinafter referred to as “dissolving
corporation”) will be conducted according to the following ratios.
(unit: KRW,
Share)
|
Item
|
Surviving
Corporation
(Webzen
Inc.)
|
Dissolving
Corporation
(NHN Games
Co., Ltd.)
|
|
Value per
share
|
11,800
KRW
|
18,557
KRW
|
|
Merger
Ratio
|
1:
1.57262712
(1.57262712
shares of surviving corporation issued per 1 share of dissolving
corporation.)
|
B.
Calculation Formula
Article 176-5 of
the Enforcement Decree of the Financial Investment Services and Capital Markets
Act of Korea (the “Enforcement Decree”) provides that, in cases of a merger
between a “listed corporation” and a “unlisted corporation” (i.e., a private
company), (i) the stock exchange ratio shall be determined based upon the market
price of the stock-listed corporation (as long as market price exceeds the net
asset value per share) and the weighted average of “asset value,” “earnings
value” and “relative value” of the stock-unlisted corporation, provided that
when relative value is unavailable, it may be replaced with the weighted average
of the asset value and earnings value (the methods of calculating asset value,
earnings value and relative value are to be prescribed by the Finance Service
Commission (“FSC”)) and (ii) if the surviving corporation after the merger is a
stock-listed corporation, the appropriateness of the merger value shall be
appraised by an outside appraisal organization such as an accounting firm,
credit rating agency or other organizations designated in the rules. FSC has
published interpretive guidelines setting forth that (i) asset value shall be
calculated by subtracting loans and receivables the payments of which are
doubtful from net tangible assets and then dividing by issued and outstanding
shares, (ii) earnings value shall be calculated by dividing estimated net profit
per share (using the weighted average of the projections of net income for the
current year and the immediately subsequent year after subtracting the expected
dividends) by the benchmark ROE (150% of the average interest rate of 1-year
term savings of four Korean commercial banks designated by FSC) and (iii)
relative value is calculated by averaging the market price of two or more
companies that are conducting similar businesses, listed on an exchange and meet
other requirements and then discounting the price at a reasonable rate, which
shall not be lower than 30%.
2
.
External Evaluation of
Merger
A.
Evaluating Authority: Deloitte
B.
Overview of Evaluation
-
Date of Evaluation Contract: March 29
th
,
2010
-
Evaluation Period: March 29
th
, 2010 –
April 14
th
,
2010
-
Name of Evaluating Company: Deloitte
In
reviewing the merger ratio of 1 : 1.57262712 reported by the surviving
corporation, we used the financial statements as of December 31
st
, 2009
provided by the surviving corporation, the financial statements as of December
31
st
, 2009
provided by the dissolving corporation, stock data of the surviving corporation,
estimated financial statements for fiscal year ending on December 31
st
, 2010
and 2011 of the dissolving corporation, respectively, and applied the merger
value calculation methods stipulated by Article 165-4 of the Financial
Investment Services and Capital Markets Act, Article 5-13 of the Regulations on
Issuance and Announcement of Shares, and Articles 4 through 8 of its Enforcement
Details.
Section
3 Item Regarding the Appraisal Rights of Objecting Shareholders
1.
Overview of Appraisal Rights of Objecting Shareholders and other related
matters
A.
Requirements of Appraisal Rights of Objecting Shareholders
As
per Article 522-3 of the Commercial Code and Article 165-5 of the Financial
Investment Services and Capital Markets Act, shareholders of record, as of the
date closure of the shareholder list, who object to the resolution of the board
of directors approving the merger can demand that the corporation in question to
purchase the shares they own, within 20 days from the date of the approval of
the merger by the general shareholders meeting, in written form by specifying
the type and number of shares to be purchased, as long as they have notified
their objection to the resolution of the board of directors by the day before
the general shareholders meeting (only applies to shares verified to have been
acquired by the objecting shareholder before the resolution of the board of
directors or those verified to have been acquired after announcement of the
resolution of the board of directors but acquired under a stock purchasing
contract which was executed by the day after announcement of the said
resolution). Appraisal rights can be exercised on just a portion of shares owned
as well. However, in accordance with Article 522-3 of the Commercial Code and
Article 165-5 of the Financial Investment Services and Capital Markets Act,
appraisal rights of objecting shareholders are only given to shareholders
continuously holding shares from the date of closure of the list of shareholders
to the date of exercising appraisal rights of objecting shareholders. Holders of
the shares sold and reacquired during such period lose such appraisal rights.
Once the appraisal rights are exercised, it is final.
Also, shareholders
who submitted to the corporation a written objection regarding the resolution of
the board of directors on the merger, but voted in favor of the merger at the
general shareholders meeting cannot exercise appraisal rights of objecting
shareholders. Of the parties to the agreement, Webzen, the KOSDAQ listed
corporation, must purchase the shares subject to the exercising of such
appraisal rights within one month from the last date the appraisal right
exercise period, and NHN Games, the unlisted corporation, must purchase those
shares within one month from the last date the appraisal right exercise
period.
|
※
|
In accordance
with Article 165-5 of the Financial Investment Services and Capital
Markets Act, this only applies to shares verified to have been acquired by
the objecting shareholder before the resolution of the board of directors
and those verified to have been acquired after announcement of the
resolution of the board of directors but acquired under a stock purchasing
contract which was entered into by the day after announcement of said
resolution.
|
B.
Expected Price of Appraisal Rights
(1)
Expected purchase price of share for Webzen in response to the exercise of
appraisal rights
|
Proposed
Price by Company for Agreement
|
KRW 12,144
per Share
|
|
Basis for
Calculation
|
Value
calculated in accordance with Article 176-7 of the Enforcement Decree of
the Financial Investment Services and Capital Markets
Act
|
|
Procedure if
agreement is not made
|
When the
company in question or the shareholder exercising appraisal rights
disagree on the proposed price of the company, request can be made to a
court to determine the price in accordance with Article 165-5 Paragraph 3
of the Financial Investment Services and Capital Markets
Act
|
|
※
|
Formula for
Calculating Expected Share Purchase Price (As of April 14
th
,
2010)
|
|
Item
|
Price
|
Period
related to the Calculation
|
|
①
Weighted
average stock price of traded volume within past two
months
|
12,224
|
16 FEB 2010 ~
14 APR 2010
|
|
②
Weighted
average stock price of traded volume within past one month
|
12,068
|
15 MAR 2010 ~
14 APR 2010
|
|
③
Weighted
average stock price of traded volume within past one week
|
12,140
|
08 APR 2010 ~
14 APR 2010
|
|
Calculated
purchase price {(
①
+
②
+
③
)/3}
|
12,144
|
-
|
The share values
and traded volumes for the two months prior to April 14
th
, 2010
used to calculate the aforementioned price are as follows.
|
Date
|
Closing
Price
|
Traded
Volume
|
Traded Volume
times Closing Price
|
|
16 FEB
2010
|
12,550
|
154,571
|
1,939,866,050
|
|
17 FEB
2010
|
12,700
|
110,231
|
1,399,933,700
|
|
18 FEB
2010
|
12,750
|
67,831
|
864,845,250
|
|
19 FEB
2010
|
12,600
|
221,725
|
2,793,735,000
|
|
22 FEB
2010
|
12,600
|
131,854
|
1,661,360,400
|
|
23 FEB
2010
|
12,800
|
159,268
|
2,038,630,400
|
|
24 FEB
2010
|
12,650
|
73,337
|
927,713,050
|
|
25 FEB
2010
|
12,600
|
95,065
|
1,197,819,000
|
|
26 FEB
2010
|
12,800
|
106,250
|
1,360,000,000
|
|
02 MAR
2010
|
12,600
|
65,835
|
829,521,000
|
|
03 MAR
2010
|
12,400
|
74,067
|
918,430,800
|
|
04 MAR
2010
|
12,350
|
125,449
|
1,549,295,150
|
|
05 MAR
2010
|
12,000
|
134,856
|
1,618,272,000
|
|
08 MAR
2010
|
11,850
|
150,788
|
1,786,837,800
|
|
09 MAR
2010
|
11,800
|
104,461
|
1,232,639,800
|
|
10 MAR
2010
|
12,200
|
118,711
|
1,448,274,200
|
|
11 MAR
2010
|
12,100
|
65,493
|
792,465,300
|
|
12 MAR
2010
|
12,150
|
58,042
|
705,210,300
|
|
15 MAR
2010
|
12,150
|
60,983
|
740,943,450
|
|
16 MAR
2010
|
11,900
|
77,284
|
919,679,600
|
|
17 MAR
2010
|
11,900
|
137,104
|
1,631,537,600
|
|
18 MAR
2010
|
11,750
|
60,607
|
712,132,250
|
|
19 MAR
2010
|
11,750
|
155,894
|
1,831,754,500
|
|
22 MAR
2010
|
11,450
|
100,669
|
1,152,660,050
|
|
23 MAR
2010
|
11,700
|
81,950
|
958,815,000
|
|
24 MAR
2010
|
11,550
|
35,591
|
411,076,050
|
|
25 MAR
2010
|
11,450
|
63,073
|
722,185,850
|
|
26 MAR
2010
|
11,600
|
45,778
|
531,024,800
|
|
29 MAR
2010
|
12,000
|
122,115
|
1,465,380,000
|
|
30 MAR
2010
|
12,300
|
244,736
|
3,010,252,800
|
|
31 MAR
2010
|
12,550
|
211,329
|
2,652,178,950
|
|
01 APR
2010
|
12,500
|
85,945
|
1,074,312,500
|
|
02 APR
2010
|
12,500
|
91,711
|
1,146,387,500
|
|
05 APR
2010
|
12,050
|
69,492
|
837,378,600
|
|
06 APR
2010
|
11,900
|
59,211
|
704,610,900
|
|
07 APR
2010
|
12,100
|
130,855
|
1,583,345,500
|
|
08 APR
2010
|
12,100
|
115,379
|
1,396,085,900
|
|
09 APR
2010
|
12,350
|
180,251
|
2,226,099,850
|
|
12 APR
2010
|
12,350
|
166,751
|
2,059,374,850
|
|
13 APR
2010
|
12,200
|
53,629
|
654,273,800
|
|
14 APR
2010
|
11,800
|
210,387
|
2,482,566,600
|
|
Weighted
average stock price of traded volume within past two months
(A)
|
4,578,558
|
55,968,906,100
|
|
Weighted
average stock price of traded volume within past one month
(B)
|
2,560,724
|
30,904,056,900
|
|
Weighted
average stock price of traded volume within past one week
(C)
|
726,397
|
8,818,401,000
|
|
Average(D)={(A+B+C)/3}
|
|
12,144
|
(2)
Expected Purchase Price for NHN Games in response to the exercise of the
appraisal rights
In
accordance with Article 374-2 Paragraph 3 of the Commercial Code, the stock
purchase price is determined through an agreement between the shareholders
requesting purchase and the company. However, if an agreement is not reached
within two months of NHN Games having received the request for shares purchase,
the company in question or the shareholder requesting the purchase can request
that a court determine the purchase price in accordance with Article 374-2
Paragraph 4 of the Commercial Code. As such, NHN Games plans to confer with the
shareholders, who gave notification of their objection to the merger in written
form prior to the day before the date of the special general shareholders
meeting, on the purchase price.
C.
Process, Method, Term and Location
(1)
Process of Exercising Appraisal Rights
(A)
Notification of Objection
In
accordance with Article 522-3 of the Commercial Code and Article 165-5 of the
Financial Investment Services and Capital Markets Act, shareholders of record as
of the day before the closure of the list (May 06, 2010) must notify their
objection with the resolution of the board of directors on the merger in written
form not later than the day before the general shareholders meeting (June 04,
2010). However, beneficial shareholders who have entrusted their stocks to stock
companies must notify the stock company. In this case, notification of objection
must be made not later than 3 working days prior to the general shareholders
meeting. Stock companies must compile the object notifications of beneficial
shareholders and notify the securities agency, the Korea Securities Depository,
not later than 2 working days before the general shareholders meeting. The Korea
Securities Depository must notify the company of such objection as proxy of the
beneficial shareholders before the general shareholders meeting.
(B)
Method of Requesting Appraisal
In
accordance with Article 522-3 of the Commercial Code and Article 165-5 of the
Financial Investment Services and Capital Markets Act, shareholders that made
the aforementioned notification of objection can exercise their appraisal rights
by submitting to the company the relevant stock certificates and a written form
with the number and types of shares owned within 20 days of the resolution of
the general shareholders meeting (June 25, 2010). However, beneficial
shareholders who have entrusted their stock certificates to stock companies can
exercise their appraisal rights by submitting an appraisal rights of objecting
shareholders request form to the stock company where their shares are and
entrusted. If beneficial shareholders make such request to their stock company
not later than 2 working days before the termination of the appraisal rights
exercise period, the Korea Securities Depository will make the request in their
place.
(2)
Appraisal Rights Exercise Period of Objecting Shareholders
In
accordance with Article 522-3 of the Commercial Code and Article 165-5 of the
Financial Investment Services and Capital Markets Act, shareholders that have
notified their objection to the resolution of the board of directors on the
merger can exercise their appraisal rights within 20 days of the resolution of
the general shareholders meeting.
(
3) Location
(A)
Shareholders of Record
|
Name of
Company
|
Location
|
|
Webzen
Inc.
|
14F, Daerung
Post Tower 2
nd
,
182-13 Guro-dong, Guro-gu, Seoul
|
|
NHN Games
Co., Ltd.
|
13F, Daerung
Post Tower 2
nd
,
182-13 Guro-dong, Guro-gu, Seoul
|
(B) Beneficial Shareholders
Entrusting Stock Certificates to Securities Companies
:
the relevant stock
companies
D. The Impact of the Results of
Appraisal Rights of Objecting Shareholders on the Effectiveness of the Merger
Contract Etc
.
With regards to the
merger of Webzen, and NHN Games, as per Article 522-3 of the Commercial Code,
Article 165-5 of the Financial Investment Services and Capital Markets Act, and
Article 176-7 of its Enforcement Decree, if the aggregate amount of the purchase
price that needs to be paid by NHN Games and Webzen in response to the exercise
of aforementioned appraisal rights exceeds KRW 30,000,000,000, the parties to
the merger can mutually agree in written form to cancel the merger or revise its
process, schedule, and dates.
E.
Method of Acquiring, Expected Date and Method of Payment of Appraisal
Funds
(1) Method of Acquiring Appraisal
Funds
:
Use existing funds
or procure funds
(2)
Method of Payment
|
Shareholders
of Record
|
Cash payment
or transfer to registered account of shareholder
|
|
Beneficial
Shareholders
|
Transfer to
personal account with the relevant financial investment business (stock
company)
|
(3)
Expected Date of Payment
|
Item
|
Name of
Company
|
Expected Date
of Payment
|
|
Surviving
Corporation
|
Webzen
Inc.
|
Payment is
expected to be made within 1 month from termination of the appraisal right
exercise period
|
|
Dissolving
Corporation
|
NHN Games
Co., Ltd.
|
Payment is
expected to be made within 2 months of receiving appraisal
requests
|
(4)
Please note appraisal prices or other terms or procedures related to the
exercise of appraisal rights are subject to change over the course of conferring
with shareholders when necessary.
(5)
Method of Selling of Shares Acquired through the Appraisal Process
The shares acquired
through the appraisal process are expected to be sold within 3 years of
purchasing such shares, in accordance with Article 165-5 Paragraph 4 of the
Financial Investment Services and Capital Markets Act and Article 176-7
Paragraph 3 of its Enforcement Decree.
F.
When Appraisal Rights are Limited or not Recognized
Not
Applicable.
Section
4 Relationship of the Parties
1.
Relationship of the Parties
A.
Share Relationship
As of the date of
submission of the Report on Important Items, NHN Games, owned 3,469,784shares
(26.74% of issued shares) of the issued stocks of Webzen
B.
Concurrently held Executive Positions
Mr. Byoung Gwan
Kim, the director of strategy and registered executive of Webzen, is also the
CEO of NHN Games. Mr. Kim was elected as director of Webzen by the vote of the
special general shareholders meeting convened on October 24
th
, 2008.
Mr. Kim was elected and registered as the CEO of NHN Games, from September
12
th
, 2005
through the date of the submission of the Report on Important Items in
Koreat.
C.
Cases in which major shareholders of one corporation is a related party to the
other corporation
The largest
shareholder of the surviving corporation, Webzen, is NHN Games, and the CEO of
NHN Games is a related party to NHN Corporation.
The status of major
shareholders of Webzen and NHN Games are as follows.
|
Name of Major
Shareholder
|
Webzen
Inc.
|
NHN Games
Co., Ltd.
|
|
Owned
Shares
|
Percentage
(base on total issued shares)
|
Owned
Shares
|
Percentage
(base on
total issued shares)
|
|
Major
Shareholder Etc.
|
NHN
Corp.
|
-
|
-
|
6,000,000
|
46.88%
|
|
Related Party
(note 1)
|
-
|
-
|
5,978,450
|
46.71%
|
|
Major
Shareholder Etc.
|
NHN Games
Co., Ltd.
|
3,469,784
|
26.74%
|
-
|
-
|
|
Related
Party(note 2)
|
10,000
|
0.08%
|
-
|
-
|
(Note 1) As of the
date of submission of the Report on Important Items in Korea, Mr. Byoung Gwan
Kim, the CEO of NHN Games (the largest shareholder of Webzen), is a related
party to NHN Corporation.
(Note 2) As of the
date of submission of the Report on Important Items in Korea, Mr. Chang Keun
Kim, the CEO of Webzen, is a related party of NHN Games, the largest shareholder
of Webzen.
D.
Other Competitive or Supplementary Relationships and other Relevant
Items
Webzen expects to
enhance its efficiency by implementing measures involving efficient development
of online games, cost reductions, and avoidance of overlapping investments, made
possible through the integrated operation of shared management resources
including game development personnel, R&D facilities and networks, game
service infrastructure, and other support personnel.
Additionally, this
merger is expected to increase the number of online game services Webzen offers.
Also, constant growth in sales and profits are expected through, among other
things, the offering of new games currently under development. As such, the
achievements of NHN Games will be reflected as results of Webzen following the
merger and will thus contribute to increasing sales and profits of
Webzen.
2.
Transactions between Parties
A.
Obligation Guarantees and Provision of Securities for Parties
Not
applicable.
B.
Purchasing, Sales, Business Receivables, Obligations, Accounts Payable,
Outstanding Payments Etc.
Significant
transactions between Webzen and related parties for this fiscal term and the
previous term as per the audit report as of and for the year ended
December 31, 2009 and the related receivables and obligations as of December
31
st
, 2008
and 2009 are as follows (unit: KRW 1,000).
|
Account
Item
|
Sales
Etc.
|
Purchases
Etc.
|
Receivables
|
Obligations
|
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|
Companies
with major influence
|
|
NHN Games
Co., Ltd.
|
634,375
|
-
|
461,630
|
-
|
206,598
|
-
|
563,291
|
-
|
|
NHN
Corp.
|
217,509
|
-
|
61,931
|
-
|
31,119
|
-
|
6,946
|
-
|
|
|
851,884
|
-
|
1,523,561
|
-
|
237,717
|
-
|
570,237
|
|
|
Subsidiary
Companies
|
|
9Webzen
Limited
|
345,934
|
360,445
|
-
|
-
|
17,933
|
40,038
|
-
|
-
|
|
Webzen
Taiwan Inc..
|
710,171
|
768,140
|
-
|
-
|
3,383,130
|
3,740,210
|
-
|
-
|
|
Webzen
America
Inc.
|
-
|
207,492
|
-
|
-
|
5,119,743
|
5,451,065
|
-
|
-
|
|
Flux Co.,
Ltd.
|
-
|
-
|
-
|
-
|
60,000
|
60,000
|
-
|
-
|
|
|
1,056,105
|
1,336,077
|
-
|
-
|
8,580,806
|
9,291,313
|
-
|
-
|
C.
Transactions with Major Shareholders of Parties to the Merger
(1)
Credit Grants to Major Shareholders Etc.
Not
applicable.
(
2) Asset Transfer to and from Major
Shareholders
Not
Applicable.
Section
5 Other Items Required for the Protection of Investors.
1.
Previous Mergers
Both parties have
had no previous mergers.
2.
Shares of Major Shareholders
A.
Share Holdings of the Largest Shareholders and Related Parties Before and After
the Merger
|
Shareholder
|
Type
|
Before
Merger
|
After
Merger
|
Note
|
|
No. of
Shares
|
Share
|
No. of
Shares
|
Share
|
|
|
NHN Games
Co., Ltd.
|
Common
|
3,469,784
|
26.74%
|
-
|
-
|
Convert to
treasury shares after merger
|
|
NHN
Corp.
|
Common
|
-
|
-
|
9,435,763
|
28.50%
|
|
|
Chang Keun
Kim
|
Common
|
10,000
|
0.08%
|
10,000
|
0.03%
|
CEO of Webzen
Inc.
|
|
Byoung Gwan
Kim
|
Common
|
-
|
-
|
9,401,873
|
28.40%
|
CEO of NHN
Games Co., Ltd.
|
|
Total
|
Common
|
3,479,784
|
26.82%
|
18,847,636
|
56.93%
|
|
|
Total No. of
Issued Shares
|
Common
|
12,974,000
|
100.00%
|
33,103,627
|
100.00%
|
|
B.
Plan for Transfer of Shares of Largest Shareholder Etc., After
Merger
Not
Applicable
C.
Restriction of Sale of Shares of Largest Shareholder Etc., and
Authority
This is a merger by
the KOSDAQ-listed corporation Webzen of the unlisted company NHN Games and is
deemed an “indirect listing” in accordance with Article 19 Paragraph 1 of the
KOSDAQ Market Listing Rules stipulating the change of largest shareholder.
Therefore, in accordance with Article 22 Paragraph 1 of the KOSDAQ Market
Listing Rules the largest shareholder of the dissolving corporation (NHN Games),
NHN Corp. and related parties must put Webzen shares acquired from the merger in
protective entrustment of the Korea Securities Depository for 2 years from the
day of merger (“Sale Restriction Period”). However, after the first year of the
Sale Restriction Period, up to 5% of the shares so acquired during the merger
may be sold each month.
[Protective
Entrustment of the Largest Shareholder of Dissolving Corporation]
|
Name of
Shareholder
|
Relationship
|
Shares in
Protective Entrustment
|
Term of
Entrustment
|
Note
|
|
NHN
Corp.
|
Largest
Shareholder
|
9,435,763
|
2
years
|
Mandatory
protective entrustment
|
|
Byoung Gwan
Kim
|
Related
Party
|
9,401,873
|
2
years
|
Mandatory
protective entrustment
|
|
Total
|
18,837,636
|
|
|
3.
Change in Capital After Merger
(Unit: share,
KRW)
|
Item
|
Type
|
Before Merger
(note 1)
|
After
Merger
|
|
No. of
Authorized Shares
|
Common
Shares
|
40,000,000
|
40,000,000
|
|
No. of Issued
Shares
|
Common
Shares
|
12,974,000
|
33,103,627
|
|
Capital
|
6,487,000,000
|
16,551,813,500
|
|
Total Capital
Reserve (note 2)
|
129,975,413,130
|
-
|
(Note 1) The number
of authorized shares, issued shares, and capital before merger are as of the
date of this stock report (merger).
(Note 2) The total
of capital reserve before merger is the sum of the capital surplus, earned
surplus and capital adjustment, and other integrated total income and loss as of
December 31
st
, 2009.
However, the reserves that may increase due to the merger is omitted as it will
be decided according to the related laws and corporate accounting standards
applied to the fiscal status of Webzen.
4.
Management Policy and Executive Composition
The directors and
auditors of Webzen will be decided after the merger. Currently, Webzen has no
plans to change the senior management or the board members other than filling in
a vacant board seat.
5.
Business Plan Etc.
Through the
acquisition of NHN Games, Webzen plans to integrate the online game and
publishing field, reinforce its product portfolio, integrate human resources and
material and net work resources, and efficiently allot and manage business
resources so as to achieve stable growth, thereby increasing its share
value.
6.
Select Post-Merger Financial Information
A.
Pro Forma Balance Sheet
(unit:
million won)
|
Account
Item
|
Before
Merger
(As of
December 31
st
,
2009)
|
After
Merger
|
|
Webzen
Inc.
|
NHN Games
Co., Ltd.
|
|
[Liquid
Assets]
|
88,921
|
5,444
|
94,365
|
|
Quick
Assets
|
88,921
|
5,444
|
94,365
|
|
Inventory
|
-
|
-
|
|
|
Non Liquid
Assets
|
43,327
|
56,787
|
100,114
|
|
Investment
Assets
|
459
|
54,142
|
54,601
|
|
Tangible
Assets
|
3,879
|
329
|
4,208
|
|
Intangible
Assets
|
5,344
|
782
|
6,126
|
|
Other Non
Liquid Assets
|
33,646
|
1,534
|
35,180
|
|
Total
Assets
|
132,248
|
62,231
|
194,479
|
|
[Liquid
Debt]
|
7,159
|
20,649
|
27,808
|
|
[Non Liquid
Debt]
|
4,852
|
18,957
|
23,809
|
|
Total
Debt
|
12,012
|
39,606
|
51,618
|
|
[Capital]
|
6,487
|
6,400
|
12,887
|
|
[Capital
Surplus]
|
135,892
|
7,027
|
142,919
|
|
[Capital
Adjustment]
|
(18,717)
|
724
|
-17,993
|
|
[Other
Integrated Total Income and Loss]
|
(1,442)
|
372
|
-1,070
|
|
[Profit
Surplus]
|
(1,983)
|
8,103
|
6,120
|
|
Total
Capital
|
120,237
|
22,625
|
142,862
|
|
B.
|
Pro
Forma Income Statement
|
(unit:
million won)
|
Account
Item
|
Before
Merger
(As of
December 31
st
,
2009)
|
After
Merger
|
|
Webzen
Inc.
|
NHN Games
Co., Ltd.
|
|
Sales
|
27,802
|
25,299
|
53,101
|
|
Business
Profits
|
-1,546
|
12,473
|
10,927
|
|
Non-operating
Revenue
|
6,418
|
5,420
|
11,838
|
|
Non-operating
Costs
|
3,499
|
10,718
|
14,217
|
|
Net Profits
Before Corporate Tax
|
1,373
|
7,175
|
8,548
|
|
Corporate Tax
Costs
|
1,055
|
204
|
1,259
|
|
Net Profit
for Term
|
318
|
6,971
|
7,289
|
* The estimated
balance sheet and income statement above are simple addition of the numbers on
the audit reports as of December 31
st
, 2009,
and can be different from financial statements drafted in accordance with
corporate Generally Accepted Accounting Principles.
7.
Publishing and Dissemination of Investment Guidebooks
A.
Publishing of Investment Guidebooks
In accordance with
Article 123 of the Financial Investment Services and Capital Markets Act, once
this stock report (merger etc.,) is put in effect by the FSC, Webzen will draft
an investment guidebook and publish it on the electronic announcement homepage
of the Financial Supervisory Service (
http://dart.fss.or.kr
).
Also, the guidebooks will be placed at Webzen’s company headquarters, the FSC,
and KRX so that the shareholders of Webzen and NHN Games may view
it.
B.
Dissemination of Investment Guidebooks
Shareholders of NHN
Games that will receive registered common stocks of Webzen due to this merger
(except professional investors stipulated in Article 9 Paragraph 5 of the
Financial Investment Services and Capital Markets Act and those who are exempt
from dissemination of investment guidebooks as per Article 132 of the
Enforcement Decree) must receive investment guidebooks prior to the special
general shareholders meeting for the approval of the merger.
(1)
Parties that Need to Receive Investment Guidebooks and Method of
Dissemination
(A)
Parties
Shareholders of
Webzen and NHN Games listed on the shareholder list as of the date of
determination of shareholders for the general shareholders meeting on the merger
(06 MAY 2010).
(B) Method of
Dissemination
Investment
guidebooks to be sent via registered mail to addresses registered on the
shareholder list.
(2)
Other Items
(A) Of the
shareholders of NHN Games that will receive registered normal stocks of Webzen
due to this merger, those who cannot receive such guidebooks through registered
mail should receive the guidebooks through electronic documents or express their
will to deny acceptance as per Article 385 of the Enforcement Decree of the
Financial Investment Services and Capital Markets Act.
(B) For details on
the receiving of guidebooks please contact Webzen or NHN Games using the
following contact information.
|
Item
|
Telephone
Number
|
|
Webzen
Inc.
|
(02)
3498-1600
|
|
NHN Games
Co., Ltd.
|
(02)
6330-3300
|
|
Financial Investment Services and
Capital Markets Act
|
|
Article
9 (Definition of Other Terms)
(5) The term
“professional investor” in this Act shall mean an investor falling under
any of the following subparagraphs who has risk-taking capacity over the
investment when taking into account his/her expertise for the financial
investment products and asset size: Provided, That where a professional
investor designated by the Presidential Decree notifies a financial
investment firm, in writing, of the intention to be treated as a
non-professional investor, the financial investment firm shall agree with
such treatment unless there is any justifiable cause, and the investor who
obtains the agreement from the financial investment firm shall be regarded
as a non-professional investor: <Amended on Feb. 3,
2009>
1.
Government;
2. The Bank
of Korea;
3. Financial
institutions designated by the Presidential Decree;
4.
Stock-listed corporations: Provided, That in the case of trading
over-the-counter derivatives with a financial investment firm, the same
shall be limited only to cases where a stock-listed corporation notifies
the financial investment firm, in writing, of its intention to be treated
as a professional investor; or
5. Others
prescribed by the Presidential Decree.
Article
124 (Justifiable Use of Prospectus)
(1) No one
shall be permitted to allow a person (excluding professional investors or
others prescribed by the Presidential Decree) who intends to acquire the
securities whose registration has taken effect to acquire such securities,
or to sell such securities to the person before a prospectus prepared in
accordance with Article 123 is distributed. In such a case, when a
prospectus is provided in the form of electronic documents in accordance
with Article 436, the prospectus shall be regarded as being distributed
when each of the following requirements is satisfied:
1. A person
who receives an electronic document (hereinafter referred to as “recipient
of electronic documents”) is required to agree to receive a prospectus in
the form of electronic documents;
2. A
recipient of electronic documents is required to designate the type of
electronically transferable media and the place at which the recipient
receives the electronic documents;
3. It must be
confirmed whether a recipient of electronic documents has received the
electronic documents; and
4. The
contents of electronic documents are required to be identical to those of
the written
prospectus.`
|
1
These selected sections
of the Financial Investment Services and Capital Markets Act and the Enforcement
Decree is part of the English text prepared by the Korea Financial Investment
Association (“KOFIA”) to help foreign investors understand the Financial
Investment Services and Capital Markets Act and the FSC is not involved with the
texts any way. Thus, these English texts have no authority of the
FSC.
Only the original
Korean texts of the Financial Investment Services and Capital Markets Act and
Enforcement Decree thereof have legal effect, and the translations are to be
used solely as reference material to aid in understanding of this
Act.
For all purposes of
interpreting and applying law to any legal issue or dispute, users should
consult the original Korean texts published in the Official Gazette. If you have
any question regarding the translation, contact the KOFIA.
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Enforcement
Decree of the Financial Investment Services and Capital Markets
Act
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Article
11 (Public Offering and Secondary Distribution of Securities)
(1) In
calculating 50 investors pursuant to Articles 9 (7) and 9 (9) of the Act,
the number of persons who have been solicited to subscribe for securities
without a public offering or secondary distribution of the same type of
securities within the six months preceding the date on which the
solicitation for offer is made shall be added, and the number of persons
falling under any of the following subparagraphs shall be
subtracted:
1. A
professional falling under any of the following items:
(a) A person
falling under Articles 10 (1) 1 through 10 (1) 4 of this
Decree;
(b) A person
prescribed and publicized by the Financial Services Commission among the
persons falling under Articles 10 (3) 12 and 10 (3) 13 of this
Decree;
(c) An
accounting firm under the Certified Public Accountant Act;
(d) A credit
rating agency (hereinafter referred to as “credit rating agency”) under
the Use and Protection of Credit Information Act;
(e) A person
who holds a certificate as a certified public accountant, appraiser,
attorney at-law, patent attorney, tax accountant, etc. and provides
services, such as accounting and advisory services to an issuer;
or
(f) Others
prescribed and publicized by the Financial Services Commission as
professionals who understand the financial status or the business
operation of the issuer;
Article
132 (Person Exempted from Distributing Prospectus)
The term
“others prescribed by the Presidential Decree” under the former part of
Article 124
(1) of the
Act other than each subparagraph shall mean persons falling under either
of the following subparagraphs:
1. A person
falling under Articles 11 (1) 1 (c) through 11 (1) 1 (f) of this Decree
and each item of Article 11 (1) 2 of this Decree; or 2. A person who gives
notice, in writing, that he/she refuses to receive a
prospectus.
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8.
Other Matters Related to Investment Decisions
The following
documents are placed at headquarters from 2 weeks prior to the general
shareholders meeting stipulated in Article 522 Paragraph 1 of the Commercial
Code until 6 months after merger.
A. Agreement and
Plan of Merger
B. Document stating
the allotment of shares to shareholders of company dissolving upon merger and
grounds thereof.
C. Financial
statements (balance sheet) and income statement of each company.
Shareholders and
creditors of each company can request viewing or pay company designated fees and
request issuance copies or extracts any time during operating
hours.
