SM Culture & Contents opts for 5-to-1 share consolidation to boost share price, firm value

SM Culture & Contents has decided to consolidate its shares at no cost to shareholders in a bid to stabilize its share price and enhance corporate value.

The company's board resolved Tuesday to put a 5-to-1 share consolidation — combining every five common shares into one — on the agenda of an extraordinary general shareholders meeting set for Monday.

The consolidation will raise the par value per share from 500 won to 2,500 won. The total number of issued shares will fall from 96,714,620 to 19,342,924. The transaction is a 100 percent no-cost consolidation with no change to paid-in capital.

The new shares will take effect Dec. 11, after a temporary trading suspension, and are scheduled to be listed Dec. 30.

SM Culture & Contents has also undertaken internal restructuring aimed at improving overall operational efficiency, shifting its focus from expanding its business footprint to strengthening fundamentals and improving its operating profit margin.

On the business side, the company plans to adopt a strict profit-and-loss-based approach to budget allocation and capital recovery, and to apply stable revenue models from the planning stage of major projects to reinforce financial soundness.

The company recently signed an MOU with global streaming service Netflix, under which it will handle the development and management of a group debuting through the K-pop audition project "We Go High."

"This measure is part of a capital structure overhaul aimed at adjusting the excessively large number of shares in circulation to an appropriate level and enhancing shareholder value," a company official said. "We will create a long-term investment environment grounded in sound management and drive sustainable growth."