'Hanjin Honorary Chairman's Demand'... Bando "Unreasonable" Hanjin "Clear Fact"

Hanjin Group Headquarters, Jung-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Yoo Je-hoon] The dispute between Kwon Hong-sa, chairman of Bando Construction, and Cho Won-tae, chairman of Hanjin Group, over claims that Kwon sought to participate in management by requesting the honorary chairman position last year has been fiercely unfolding late into the night.

On the afternoon of the 16th, Hanjin Group issued a press release stating, "Chairman Cho met twice at the Imperial Palace Hotel on December 10 and 16 last year," adding, "At those meetings, Chairman Kwon blatantly demanded the recommendation for honorary chairman of Hanjin Group, appointment as a registered executive or auditor of Hanjin KAL, and real estate development rights, effectively seeking company management participation."

This is interpreted as a rebuttal to Bando Construction's claim that "Chairman Cho first requested meetings seeking help, and they met several times."

Regarding Bando's assertion that "At the time of meeting Chairman Cho last year, their shareholding was only 2-3%, making the demand for honorary chairman and joint management participation unreasonable," Hanjin Group countered, "This is an obvious lie. As of December 6 last year, Bando Construction's stake in Hanjin KAL was 6.28%, as clearly disclosed," adding, "Considering the situation at the time, Chairman Kwon's proposal, holding a significant amount of shares, was closer to a threat than a proposal."

Hanjin Group further stated, "They have not contributed at all to the group's growth and development. Rather, the party who illegally made a 'false disclosure of holding purpose' is the one talking about honorary chairman, which itself is an unreasonable act," emphasizing, "Bando Construction's concealment of management participation purpose and false disclosure as a simple investment is a serious criminal act that disrupts market order strictly regulated by the Capital Markets Act, severely damaging the fairness and reliability of the capital market."

Earlier, after changing the investment purpose to "management participation" in January this year, Bando Construction formed a "shareholder alliance for the normalization of Hanjin Group (so-called three-party alliance)" together with former Korean Air Vice President Cho Hyun-ah and private equity fund KCGI, launching a full-scale management rights dispute.

On the 3rd, Bando Construction also filed an injunction lawsuit against Hanjin KAL to allow voting rights. The three-party alliance explained that this was to prevent situations such as the Hanjin KAL management suddenly disallowing voting rights at the shareholders' meeting.

However, Hanjin KAL responded by calling it "a thief feeling guilty," rebutting, "After allegations that Bando Construction's shareholding purpose was a false disclosure surfaced, they preemptively filed an injunction lawsuit to recognize their voting rights."

According to current Capital Markets Act, if the purpose of stockholding is falsely reported, voting rights for the portion exceeding 5% of the total issued shares related to the violation are not allowed. If Bando Construction's disclosure is ruled false, voting rights for 3.20% out of their 8.20% stake as of the end of last year could be restricted.

There is a similar case. In 2007, consulting firm DM Partners initially disclosed their purchase of 11.87% of Korea Petroleum Industry shares as a "simple on-market purchase," but after increasing their stake to 17.64% the following month, they disclosed it as "for management participation," pursuing a hostile takeover. The Securities and Futures Commission judged that the initial 14.99% purchase was concealed as management participation and ordered the sale of those shares.

Meanwhile, if Bando's disclosure is concluded as false, the three-party alliance's stake will decrease from 31.98% to 28.78%. On the other hand, Chairman Cho's side, including the largest shareholder and related parties (Delta Air Lines) with 32.45%, Korean Air's self-insurance and employee association (3.8%), and GS Caltex (0.25%), will increase to 36.50%.

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