[Active Volcano Hanjin Family] Owner Family and KCGI, Whose Side Is Time On?

KCGI Holds 17.3% Stake in Hanjin Kal... Expands Shares Through Stock-Backed Loans
Savings Banks' Interest Costs Are Not Insignificant

Will the rift within the Hanjin Group family be sealed as it is? Although a reconciliation atmosphere was created for the greater cause of maintaining management rights, realistic adjustments of interests for peaceful family co-management have not yet been achieved. Without mutually acceptable give-and-take, the rift can resurface at any time. Everyone knows that if they scatter, they all perish together, but perfectly mending a broken plate is no easy task. It is also not easy to distinguish between external allies and adversaries. KCGI, Delta Air Lines, and Bando Group continue to buy shares of Hanjin KAL, calculating their moves. They may currently be on our side, but they could turn around and reveal their claws at any moment. The National Pension Service and many individual investors watching the situation are weighing which side to take. The third generation of the Hanjin family stands at a crossroads on whether they can maintain group control and management rights across three generations. We examine the process through which they secured control over Hanjin Group, the current situation, future variables, and assess whether the sibling co-management system can be sustained long-term.

[Asia Economy Reporter Park Hyung-su] Former Korean Air Vice President Cho Hyun-ah decided to take a different path from her younger brother, Hanjin Group Chairman Cho Won-tae, complicating the calculations of the private equity fund KCGI, which holds a 17.29% stake in Hanjin KAL.

Although KCGI, which had already threatened the management rights of the Hanjin KAL owner family, is now seen as unlikely to ally with either former Vice President Cho or Chairman Cho, the reality is not simple. Even if KCGI nominates a professional manager alone at the Hanjin KAL regular shareholders' meeting in March, it will be difficult to secure a majority of voting rights among attendees. Moreover, a significant portion of the shares held have been used as collateral to raise funds from savings banks and Yuha Securities, which forces KCGI to prioritize practical benefits over principles.

According to the Financial Supervisory Service on the 6th, KCGI has provided 6,154,933 shares, which is 60% of its 10,231,640 shares held, as collateral.

According to the large shareholder report submitted by KCGI on December 23 last year, KCGI borrowed funds using Hanjin KAL shares as collateral from Yuha Securities, The K Savings Bank, Seram Savings Bank, Namyang Savings Bank, Pyeongtaek Mutual Savings Bank, Samjeong Savings Bank, Jinju Savings Bank, Dream Savings Bank, JT Chin-ae Savings Bank, Aequon Savings Bank, and Jinju Savings Bank. While the savings banks set the loan period to one year, Yuha Securities set it to three or six months, apparently to manage risk more strictly than the savings banks.

A financial investment industry official said, "The interest burden from stock-collateralized loans is not insignificant," adding, "If KCGI representatives do not enter as registered executives at the March Hanjin KAL shareholders' meeting, it may become difficult to secure additional funds."

Although former Vice President Cho has opposed Chairman Cho's sole management, KCGI finds it harder to build allies than at last year's Hanjin KAL shareholders' meeting because the proportion of shares held by minority shareholders has decreased.

U.S. Delta Air Lines has secured a 10% stake in Hanjin KAL, and Bando Construction acquired a 6.28% stake through its affiliates Bando Development, Daeho Development, and Hanyoung Development. Including the 28.95% stake held by the Hanjin KAL owner family, major shareholders hold more than 62.5% of Hanjin KAL shares.

Considering that the National Pension Service and minority shareholders will participate in the regular shareholders' meeting, KCGI would need to secure an additional approximately 20% of total voting rights to obtain a registered executive position. This is why there is speculation that, although weaker in principle, allying with either Chairman Cho or former Vice President Cho would be more beneficial than going it alone.

A financial investment industry official said, "It will not be easy for KCGI to sell the shares it holds on the market," adding, "They need to secure management rights and increase corporate value before selling, but the involvement of Delta Air Lines and Bando Construction has complicated the calculations."

This content was produced with the assistance of AI translation services.