"Kumho Petrochemical Major Shareholder Park Cheol-wan's Exit Difficult"...Management Rights Dispute Rekindled

Executive Vice President Park's Press Conference at Char Partners Asset Management
Proposes "Appointment of Outside Directors and Treasury Stock Cancellation" Ahead of the General Meeting of Shareholders

Park Cheol-wan, former executive director of Kumho Petrochemical and nephew of Park Chan-gu, chairman of Kumho Petrochemical Group, who had two management rights disputes with his uncle, has proposed the appointment of outside directors and the cancellation of treasury shares ahead of this month's shareholders' meeting. He explained the background of the shareholder proposal by stating, "It is necessary to establish an independent board of directors function and prevent the use of treasury shares aimed at securing friendly shares of the controlling family." The nephew's challenge at Kumho Petrochemical appears to be intensifying ahead of the general meeting.

Chapartners Asset Management, an activist fund management company to which former executive Park delegated his shareholder proposal rights, held a press conference on the 4th at the International Finance Center (IFC) in Yeongdeungpo-gu, Seoul, announcing the shareholder proposal.

Kim Hyung-kyun, Executive Director and Head of the Special Situations Division at Cha Partners Asset Management, is holding a press conference on the 4th at the International Financial Center in Yeongdeungpo-gu, Seoul.
[Photo by Choi Seo-yoon]

Chapartners stated, "Currently, there is no director on the Kumho Petrochemical board who represents the interests of general shareholders holding more than 80% of the shares," and "We recommend Kim Kyung-ho, chairman of the KB Financial Group board, as an outside director (separately elected under the 3% rule) so that he can serve as an audit committee member."

They added, "The board tolerated Chairman Park's illegal employment for 54 months since the end of 2018," and "failed in internal control by even giving 100% approval for the appointment of Park Jun-kyung, the chairman's son and direct beneficiary, as an inside director."

Regarding the cancellation of treasury shares, Chapartners pointed out the 18.4% of issued shares of Kumho Petrochemical that remain uncancelled treasury shares, arguing that "the undervaluation problem is worsening."

Chapartners had purchased about 7,000 Kumho Petrochemical shares (0.03%) without voting rights for approximately 1 billion KRW about a week before submitting the shareholder proposal on the 7th of last month.

Former executive Park is the largest individual shareholder of Kumho Petrochemical with a 9.10% stake. In 2021, he initiated a management rights dispute against Chairman Park but was defeated in the shareholders' meeting vote and was dismissed from his executive position.

Park Cheol-wan, former Executive Director of Kumho Petrochemical

Kumho Petrochemical showed a difficult response to Chapartners' shareholder proposal. A Kumho Petrochemical official said, "We plan to hold a board meeting this week and disclose the agenda for the shareholders' meeting," adding, "There is no official position to announce yet."

A vote battle between both sides is expected to be inevitable at this shareholders' meeting. At the press conference, Chapartners drew a line on the possibility of former executive Park selling his shares, saying "There is none." Kim Hyung-kyun, executive director of Chapartners, said, "Since it is the largest individual shareholder's stake, it is impossible to sell in the market," and "There is no one to buy, so it will be difficult to exit." Regarding the background of Chapartners' participation, he emphasized, "It is not for short-term disposal purposes but to represent the rights of minority shareholders."

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