POSCO "Steel Subsidiary IPO After Split Requires Special Shareholders' Meeting Resolution"... Reaffirms Unlisted Policy

POSCO Organizational Chart After Transition to Holding Company

[Asia Economy Reporter Choi Dae-yeol] Posco, which is preparing to transition into a holding company, has clearly stated that it will not take its steel subsidiaries, which will be spun off, public through an initial public offering (IPO).

On the 4th, Posco announced in its company split plan that if the newly established company (steel subsidiary) created through the split is to be listed, it must first obtain approval through a special resolution at the shareholders' meeting of the sole shareholder, the holding company (Posco Holdings). The special resolution requires approval from at least two-thirds of the voting rights of shareholders present and at least one-third of the total issued shares. As of the end of the third quarter, Posco's largest shareholder is the National Pension Service with a 9.75% stake. Citibank, the depositary institution for Depositary Receipts (DR), holds 7.3%, and the employee stock ownership association holds 1.41%.

Concerns had been raised that listing a non-listed subsidiary that was spun off from a listed company could infringe on existing shareholders' rights, but Posco reiterated that it will not list its subsidiaries. Posco had also stated on the 10th of last month, when it announced its holding company transition plan, that it would avoid listing newly established corporations under the holding company.

While an IPO of a non-listed subsidiary after a physical split can be effective for major shareholders or the company in raising additional funds, existing shareholders tend to view it negatively as it dilutes the value of their shares. This is why existing shareholders opposed recent major corporate splits such as LG Chem and LG Energy Solution, SK Innovation and SK On. Investors invest based on the growth potential of the company's business, but the core business is separated out.

Posco previously explained that its holding company transition plan was a measure based on the judgment that an organization dedicated to discovering future new businesses or managing business and investments was necessary. It stated that it will not list the non-listed steel subsidiaries and that the holding company will hold 100% of the shares. It believes that if the holding company, as the parent company, fully receives the dividends and results generated by the steel business, shareholder value will not be impaired.

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