Hanjin Group Chairman Likely to Win Proxy Battle
Former Korean Air vice president Cho Hyun-ah, activist fund KCGI and Bando Construction recently raised their Hanjin KAL shareholding from 37.63 percent to 40.12 percent. Specifically, it is divided into 6.49 percent, 18.69 percent and 14.95 percent, respectively. The three-way alliance increased the ratio to turn the tables in the long term after the shareholder meeting scheduled for March 27.
Hanjin Group chairman Cho Won-tae’s burden is increasing under the circumstances. The shareholding of his alliance is estimated at over 41 percent, including 22.45 percent owned by his family and affiliated persons, 14.9 percent owned by Delta Airlines and minority shares owned by GS Caltex and Hanil cement. In other words, the chairman is likely to be on the winning side at the shareholding meeting.
However, the three-way alliance can purchase additional shares. Bando Construction can take out share-based loans or use the cash of its subsidiaries. KCGI is raising an additional fund of up to 100 billion won. The number of remaining available shares is 15 percent or less.
Proxy advisory firms such as Korea Corporate Governance Service (KCGS) and Institutional Shareholder Services (ISS) are currently siding with the Hanjin Group chairman, and the three-way alliance is likely to wait for a chance after the shareholder meeting. “The race will be neck and neck up to the very last moment and both sides are likely to purchase more shares,” said an industry insider, adding, “In addition, the possibility of a new white knight cannot be ruled out.”