Ready to Raise Corporate Value
The Hyosung Group has completed its conversion into a holding company system.
According to the Data Analysis, Retrieval and Transfer System from the Financial Supervisory Service (FSS) on Dec. 19, Hyosung Corp., the holding company of the group, issued a total of 353.2 billion won (US$313.15 million) worth of new shares to shareholders of the spun-off subsidiaries – Hyosung T&C, Hyosung Heavy Industries, Hyosung Advanced Materials and Hyosung Chemical -- in return for their old shares.
With the latest stock swap, Hyosung fulfilled the requirements of the holding company system under the current fair trade act. A parent company is required to hold a stake of at least 20 percent in a listed subsidiary within two years after a spin-off. Hyosung, which owned a 5.26 percent stake in each subsidiary, secured a 20.3 percent stake in Hyosung T&C, 32.5 percent in Hyosung Heavy Industries, 21.2 percent in Hyosung Advanced Materials and 20.2 percent in Hyosung Chemical through the stock swap.
In the process, the owner family's control of the group has been strengthened. Group chairman Cho Hyun-Joon invested 126.7 billion won (US$112.35 million) to acquire 2.61 million new shares in Hyosung Corp. His ownership grew to 21.9 percent from 14.6 percent at the end of last year. President Cho Hyun-sang bought 2.82 million shares for 137.3 billion won (US$121.77 million) to increase his stake from 12.2 percent to 21.4 percent as well. Honorary chairman Cho Seok-rae invested 23.2 billion won (US$20.58 million) to acquire 580,000 shares but his ownership fell from 10.2 percent to 9.4 percent due to the increase in new shares.
With the latest stock swap, the combined ownership of the three Chos expanded from 37 percent to more than 50 percent. As they have both met the requirement of holding company system and consolidated a hold in the group with the completion of stock swap, they are expected to improve corporate value.
Kim Jang-won, an analyst at IBK Securities Co., said, “The group will raisecorporate value as it has completed a capital increase needed for conversion into a holding company system. Since the group said this business year’s cash dividend came to over 4,000 won (US$3.55), the current 7.1 percent of dividend rate is worth the wait.”