KEPCO Demands 4 Trillion Won Interim Dividends from Six Power Generation Subsidiaries

Painful Discussions in the Boards of Six Companies Including Hansuwon

Korea Electric Power Corporation (KEPCO) is being criticized for shifting financial burdens by demanding interim dividends of up to 4 trillion won from its six power generation subsidiaries. Although this move is intended to address KEPCO’s inability to issue new corporate bonds due to worsening financial crises, it is interpreted as a measure that "removes a stone from below to prop up the one above."

According to industry sources on the 11th, KEPCO recently requested its six power generation subsidiaries?Korea Hydro & Nuclear Power (KHNP), Korea East-West Power, Korea South-East Power, Korea Southern Power, Korea Midland Power, and Korea Western Power?to resolve interim dividends by the end of the year. KEPCO aims to receive up to 4 trillion won in interim dividends from these subsidiaries in consultation with relevant government ministries.

This is reportedly the first time KEPCO has demanded interim dividends. While KEPCO has annually received dividends based on the subsidiaries’ yearly business performance, this is the first instance of requesting interim dividends from the subsidiaries.

This measure appears to be a response to concerns that if the current financial trend continues, the KEPCO bond issuance limit will be drastically reduced next year, making it impossible to issue new KEPCO bonds. According to current forecasts, after next year’s settlement, the KEPCO bond issuance limit will be exceeded, and approximately 5 trillion won worth of excess KEPCO bonds will need to be repaid immediately.

In response to KEPCO’s demand, each power generation subsidiary is holding board meetings to amend their articles of incorporation to provide a basis for interim dividends. However, some outside directors have opposed interim dividends exceeding annual operating profits, citing the possibility of breach of fiduciary duty, causing repeated difficulties in discussions. Korea Hydro & Nuclear Power, which recorded an operating loss of about 160 billion won through the third quarter of this year, postponed a vote due to opposition from some outside directors but barely passed the amendment for interim dividends at a board meeting held that morning.

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