Kim Hee-yong TYM Chairman Grows Family Company with Affiliate Support and Sells for 33 Billion Won①

[Asia Economy Reporter Jang Hyowon] Kim Heeyong, chairman of TYM (formerly Dongyang Moolsan Enterprise), a specialized agricultural machinery company, has secured a substantial amount of cash and shares by selling his family company to TYM. However, since this company grew with support from TYM, there are criticisms of major shareholder self-dealing. In particular, TYM recently promoted itself as an ESG (Environmental, Social, and Governance) company emphasizing transparent governance, so controversy is expected.

Heeyong Kim, Chairman of TYM.

Kim Heeyong Chairman’s Family Company 'GMT' Generates Over 80% of Sales from TYM

According to the Financial Supervisory Service’s electronic disclosure on the 15th, TYM acquired 100% of the shares of agricultural machinery parts manufacturer ‘GMT’ in December 2019 for 33 billion KRW. They purchased all 94.94% shares held by Kim Heeyong, his spouse, and children, as well as 5.06% held by former TYM Vice Chairman Yoon Yeodu, entirely in cash.

GMT mainly manufactures agricultural machinery parts such as ‘front loaders’ that can be mounted on tractors. Established in 2007 with a capital of 50 million KRW, Kim and his family increased the capital by 4 billion KRW in 2009, turning it into Kim’s family company.

Kim’s family company GMT grew by supplying to TYM and its affiliates. Before GMT was acquired by TYM in 2019, GMT recorded sales of 77 billion KRW, of which 83.3%, or 64.1 billion KRW, came from sales to TYM, TYM’s US subsidiary, and affiliates such as Gukje Comprehensive Machinery. In 2020, the sales proportion to TYM affiliates exceeded 90%.

Moreover, GMT, as a supplier, maintained a higher operating profit margin than TYM. In 2019, TYM recorded an operating profit margin of 1.54%, while GMT recorded more than double at 3.61%. In 2017, GMT had an operating profit margin in the double digits, whereas TYM posted a loss.

Not only in sales but TYM is also known to have supported GMT in various ways. There are allegations that TYM dispatched employees during GMT’s early establishment and supported research and development. In fact, as of the third quarter of last year, TYM had 45 R&D personnel, while GMT had only 4.

Despite GMT growing like a subsidiary of TYM, when asked why TYM did not invest shares and why GMT remained a personally owned company of Kim Heeyong’s family, and why GMT’s profit margin was higher, a TYM official stated, “There is nothing to answer beyond the disclosed information.”

From 4 Billion KRW to 33 Billion KRW in 10 Years... Kim Heeyong Chairman Increases Cash and Shares

Kim Heeyong, chairman of TYM, and his family gained enormous profits by selling the grown GMT to TYM. They increased the value of GMT, established with a 4 billion KRW investment, to 33 billion KRW in about 10 years. Along with securing cash, they also strengthened their control over TYM.

At the time of GMT’s acquisition in 2019, TYM issued a third-party allotment capital increase worth 10 billion KRW and convertible bonds (CB) worth 7.5 billion KRW to Kim and his family. In exchange for GMT shares, Kim’s family received 15.5 billion KRW in cash and TYM shares worth 17.5 billion KRW.

Furthermore, the CB issued at that time was subject to refixing (conversion price adjustment), allowing Kim’s family to secure more shares than expected. Due to a stock price drop in early 2020, the conversion price of the CB was lowered from 952 KRW per share to 838 KRW per share. As the conversion price decreased, the number of convertible shares increased from 7,878,151 to 8,949,880 shares. These CBs were converted into shares in December 2020.

With the capital increase and CB conversion, as of the end of 2020, Kim’s family’s shareholding ratio rose from 24.96% to 35.44%. By selling GMT, which was nurtured with TYM’s support, to TYM, they simultaneously secured cash and shares.

Meanwhile, TYM declared ESG management last year and has been promoting ethical and transparent management by publishing ESG reports and corporate governance charters.

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