Hanjin Management Rights Dispute Bracket Confirmed... What’s the Next Move for Cho Won-tae and Anti-Cho Won-tae?

Despite Ownership Structure Finalized, 1% Stake Gap Between Both Sides... Attention on 34% Institutional and Small Investors' Choice
Cho Won-tae vs. Anti-Cho Won-tae, Expected to Present Plans for Management and Governance Improvement

[Asia Economy Reporter Yu Je-hoon] As the lineup for the management rights battle over Hanjin Group takes shape, attention is focusing on the corporate governance improvement plans that Chairman Cho Won-tae and the anti-Cho Won-tae coalition will present as their next 'cards.' Since the gap in Hanjin KAL shares secured by both sides is only about 1 percentage point, there is speculation that a broad plan to gain support from institutional and minority shareholders may emerge.

According to the business community on the 5th, the management rights dispute structure of Hanjin Group has been organized into a three-party alliance consisting of the Hanjin family centered on Chairman Cho, former Korean Air Vice President Cho Hyun-ah, private equity fund KCGI, and Bando Construction. This followed the silence after former Vice President Cho's 'counterattack,' which sparked numerous speculations, with Lee Myung-hee, advisor of Jungseok Enterprise, and Cho Hyun-min, Executive Director of Hanjin KAL, stating their support for the current professional management system centered on Chairman Cho.

As a result, Chairman Cho (6.52%) has stably secured 22.45% of Hanjin KAL shares, including Advisor Lee (5.31%), Executive Director Cho (6.47%), and special affiliates such as group-related foundations (4.15%). Adding allies Delta Air Lines (10.00%) and Kakao (1%) brings Chairman Cho's side to 33.45%, surpassing the three-party alliance's 32.06%.

However, the situation remains uncertain. The share gap between the two sides is a narrow 'neck-and-neck' margin of about 1 percentage point. The outcome of the management rights could change depending on the choice of institutional and minority shareholders, who hold about 34%.

Both sides have already begun courting shareholders. KCGI is accepting nominations for director candidates to be appointed at the upcoming regular shareholders' meeting by the 10th. Eligibility to nominate requires holding at least one share of Hanjin KAL as of December 31 last year. Chairman Cho has also started shaping public opinion both inside and outside the company, including boarding a charter flight arranged to transport evacuees from Wuhan.

Business community interest is now focused on the next moves both sides will make.

Chairman Cho is expected to unveil a management innovation plan through the Hanjin KAL board meeting scheduled for the 7th. Previously, ahead of last year's shareholders' meeting season, Hanjin Group presented a management innovation plan called 'Vision 2023.' Given that the coalition side is emphasizing management deterioration and corporate governance (professional management system), there is speculation that a bold plan related to these issues may be proposed. For example, a representative approach could be to counter the coalition's rationale by presenting their own professional management team.

KCGI and the coalition are also likely to propose a slate of Hanjin KAL board members aligned with the timing of shareholder proposals and further specify the 'Five-Year Plan for Restoring Trust in Hanjin Group' they disclosed last year.

Lee Sang-heon, a researcher at Hi Investment & Securities, said, "While the three-party coalition has mostly revealed the blueprint for introducing a professional management system, Chairman Cho's side has yet to reveal its cards," adding, "Chairman Cho's side may respond not only with a management improvement plan but also, depending on the situation, by switching to their own professional management system to counter the coalition's rationale (introduction of a professional management system)."

Meanwhile, the choice of the National Pension Service, which holds 4.11% of Hanjin KAL shares, is also drawing attention. Although the National Pension Service reduced its stake in Hanjin KAL from 7.34% last year by nearly half, it is still considered a casting vote given the narrow share gap between the Hanjin family and the coalition. Since Chairman Cho and former Vice President Cho are openly competing, the National Pension Service is said to be in a dilemma. It is expected to expand its maneuvering room by observing the corporate governance improvement and management innovation plans proposed by both sides. This means that the National Pension Service's choice could change depending on the management innovation plan presented by Hanjin Group.

Meanwhile, the People's Solidarity for Participatory Democracy's Economic and Financial Center commented, "Although former Vice President Cho advocates the introduction of a professional management system, she also pledges to 'honor the will of the late Chairman Cho Yang-ho,' suggesting a high possibility that even if she wins the management rights dispute, she may take actions that damage corporate value," adding, "Even now, as a shareholder of Hanjin KAL, she should propose the appointment of independent directors."

Reporter Yu Je-hoon kalamal@

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