Management Reshaping Prep

Lee boo-jin (left) and Lee Seo-hyun (right), daughters of Samsung President Lee Kun-hee and executives of the company.
Lee boo-jin (left) and Lee Seo-hyun (right), daughters of Samsung President Lee Kun-hee and executives of the company.

 

Hotel Shilla President Lee Bu-jin provided Woori Bank with 71 percent of her 3.018 million Samsung SDS shares as security in December 2011, and Cheil Industries President Lee Seo-hyun signed a similar contract covering 400,000 Samsung SDS shares with Hana Bank five months later. The right of pledge is established for the 2.55 million shares, which means it is likely that the presidents provided the shares as collateral on loans.

At that time, Samsung SDS was a non-listed company, and each of its stocks was traded over the counter at approximately 100,000 won (US$92.78). Then, the collateral value added up to 250 billion won (US$231.9 million) or so. Given that financial companies lend 60 to 80 percent of the value, the actual loan amount is estimated to be over 150 billion won (US$139 million).

Some experts are pointing out that their transactions are to provide against the reshaping of the governance structure of the Samsung Group and prepare cash before buying its subsidiaries.

Neither of the presidents have purchased subsidiary shares, participated in paid-in capital increases, or bought any real estate in their own names since the provision of the collateral. At present, each of the presidents represents 7.75 percent of Cheil Industries and 3.9 percent of Samsung SDS. The collateral values are 489.1 billion won (US$453.8 million) and 91 billion won (US$84.3 million), respectively.

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