Hanyang-Lotte Construction Clash Over 2 Trillion Won Gwangju Central Park Project... Legal Dispute Expected

Conflict Over SPC Majority Shareholder Status
Lotte Construction "Acquires 49% Stake in SPC"
Hanyang "Recognized as Majority Shareholder by Court Ruling"

Hanyang and Lotte Construction have clashed over the leadership of the 'Jungang Park District 1 Private Park Special Case Project,' which aims to create the largest private park in Gwangju Metropolitan City. After Lotte Construction announced that it had become the largest shareholder of the project's special purpose company (SPC), Hanyang strongly opposed this, stating that the court ruled "Hanyang is the largest shareholder." As both sides maintain opposing positions, the possibility of a legal dispute between Hanyang and Lotte Construction over the largest shareholder status is increasing.

Perspective view of Gwangju Central Park District 1 Private Park Special Project / Image provided by Gwangju Metropolitan City

According to the construction industry on the 2nd, the Gwangju District Court ruled in favor of the plaintiff in a lawsuit filed by K&Steel against Woobin Industry and others on the 13th of last month to confirm shareholder rights in the SPC. Subsequently, on the 26th, the court ruled in favor of Hanyang in a lawsuit filed against Woobin Industry for damages due to breach of a special agreement among SPC shareholders.

In this regard, Lotte Construction announced that it repaid the debt it had guaranteed and exercised its lien on the disputed shares (49%), becoming the largest shareholder of the SPC. The SPC's board of directors meeting held on the 31st of last month approved the shareholder change resulting from the lien execution.

The Jungang Park District 1 Private Park Special Case Project involves constructing park and non-park facilities on a 2,435,027㎡ area in Geumho, Hwajeong, and Pungam-dong, Seo-gu, Gwangju. On the non-park facility site, a residential complex with 39 buildings ranging from three basement floors to 28 above-ground floors, totaling 2,772 households, is planned. The project has already received housing construction plan approval from Gwangju City and completed supervisor designation, with construction imminent. The total project cost reaches 2.1 trillion KRW.

Hanyang and Woobin Industry are shareholders of the SPC Bitgoeul Jungang Park Development, established to implement the project, holding 30% and 25% stakes respectively. Other members include K&Steel (24%) and Park M (21%). Lotte Construction initially participated as a contractor, not an SPC shareholder. Despite a special agreement among shareholders including a clause for Hanyang to exercise voting rights to secure all non-park facility construction rights, Woobin Industry led the selection of Lotte Construction as the contractor, which recently sparked the lawsuit.

Meanwhile, when Lotte Construction announced that it had gathered shares and become the largest SPC shareholder, Hanyang immediately opposed this. Hanyang stated, "The court previously ruled that Woobin Industry must pay Hanyang 49 billion KRW in damages and transfer all 25% of its SPC shares. Adding the 30% shares Hanyang already held, it secured a total of 55% of SPC shares, becoming the largest shareholder recognized by the court."

Hanyang criticized, "Lotte Construction's claim is a financial fraud intended to nullify the court ruling." Hanyang alleges that Woobin Industry, anticipating defeat in the lawsuit, along with Lotte Construction and Hub Asset Management (lead manager), declared intentional default on 10 billion KRW debt, after which Lotte Construction executed the lien as a predetermined step.

A Hanyang official said, "Lotte Construction acquired only the Woobin Industry shares subject to the court-ordered transfer and the K&Steel shares won in the shareholder rights confirmation lawsuit against Woobin Industry through an absurd lien execution, excluding Park M shares with which the lien was jointly established," adding, "This can only be interpreted as a stock seizure act and financial fraud."

In response, Lotte Construction explained, "We secured Woobin Industry's shares on the 14th of last month, before the court ruling," and "Meanwhile, Hanyang has not yet actually received the shares from Woobin Industry." They added, "The SPC has already lost the benefit of the term, and Lotte Construction raised nearly 1 trillion KRW in project financing (PF). Hanyang did not contribute when the funds were raised."

A Lotte Construction representative said, "The SPC board's approval of the shareholder change was solely to expedite the project, and Hanyang's claim that we deliberately caused default is unfounded," adding, "Hanyang, as an SPC shareholder, takes development profits but was not selected as the contractor, which seems to have escalated the conflict." Above all, they emphasized that even if Lotte Construction becomes the largest shareholder, all previously conducted project activities will remain unchanged.

Hanyang has announced plans for legal action, including criminal charges, with relevant authorities. A Hanyang official stated, "There is concern that the private park special case project, which should be promoted as a public interest project, may be distorted into a housing project for Lotte Construction's profit," adding, "Recognized as the largest shareholder by the court ruling, Hanyang will take responsibility for the project, normalize SPC members, and strive to ensure transparent project progress."

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