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3 Jan 2007

Hedge Funds Voted Down

US hedge funds Ramius Capital Group and Moon Capital Management voted with a 47.6% share to remove the directors of South Korean online game developer Gravity Co. Ltd.

Gravity's other shareholders however, rejected the proposal to remove Chief Executive Il Young Ryu and Seung Taik Baik, the company's chief operating officer.

A spokesman for the hedge funds said that the majority of "disinterested" shareholders voted to remove the executives. "These results demonstrate that Gravity's minority shareholders clearly and overwhelmingly demand the immediate removal of Mr. Ryu and Mr. Baik as directors," Mark Mitchell, Ramius Capital's executive managing director, said in a statement.

The hedge funds had cited "consistent detrimental actions against shareholders by the executives and the board through various related-party transactions with companies that clearly have conflicts of interest with the company." The hedge funds also questioned the executives' decision to acquire another gaming company, Emile Chronicle Online, without seeking an independent valuation.

In a statement from Gravity, the management "urges the two hedge funds, Ramius and Moon, to offer constructive criticism and positive encouragement as responsible shareholders."

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