FCP "Overseas Business Led by Bang Gyeongman Full of Deficits" VS KT&G "Hero of Surpassing 1 Trillion"

Overseas Export Deficit in Both Cigarettes and E-cigarettes
Major Shareholder Industrial Bank of Korea Supports Recommended Candidate
KT&G "Serious Management Vacuum if Appointment Proposal Fails"

Ahead of the KT&G shareholders' meeting scheduled for the 28th to discuss the appointment of the next CEO, intense 'off-site tensions' are unfolding. The largest shareholder, Industrial Bank of Korea (IBK), and activist fund Flashlight Capital Partners (FCP) are publicly opposing the nomination of CEO candidate Bang Kyung-man. In response, KT&G has unusually issued a public statement to rebut these claims.

On the 14th, Lee Sang-hyun, CEO of FCP, revealed overseas business-related data targeting candidate Bang for the first time during an online shareholders' briefing. Lee stated, "KT&G is running deficits in both overseas cigarette and heated tobacco product (HNB) exports," adding, "The overseas performance is crucial because Bang Kyung-man was responsible for global business." His argument is that "it makes no sense to recommend a CEO candidate despite such poor overseas results." The KT&G CEO Candidate Recommendation Committee cited Bang's global achievements, saying he "led efforts to penetrate overseas markets and achieved a historic milestone of surpassing 1 trillion KRW in overseas sales" as one of the reasons for his selection.

According to FCP, KT&G posted losses for two consecutive years in both overseas cigarette business and HNB export sectors. The overseas cigarette business recorded operating losses of 70 billion KRW in 2021 and 59 billion KRW in 2022. The HNB export segment posted deficits of 30 billion KRW in 2021 and 24 billion KRW in 2022. Lee said, "Since export performance details were not disclosed, we had to file a provisional injunction for information disclosure in court to obtain these data," adding, "If there are objections to the data, I am willing to have a one-on-one debate with candidate Bang."

He further stated, "If KT&G's deep-rooted governance issues are resolved, the stock price could more than double from its current level," and requested, "Please support outside director candidate Son Dong-hwan, recommended by IBK, and oppose the appointments of Bang Kyung-man and outside director candidate Lim Min-gyu, who were nominated by the KT&G board." IBK also conveyed to shareholders on the 12th through a 'proxy voting recommendation document' that they support Son Dong-hwan but oppose Bang Kyung-man and Lim Min-gyu. In effect, the activist fund and the largest shareholder are aligned. IBK holds a 7.30% stake in KT&G, while FCP's shareholding is about 1%.

On the 13th, KT&G issued a statement on its website titled 'Position on IBK's Public Materials,' saying, "If candidate Bang's appointment is rejected, the serious management vacuum that may arise could lead to damage to corporate value and shareholder interests, including those of IBK, so shareholder approval is necessary." The company also denied claims that "operating profit declined after Bang became an inside director, allegations of overseas trips for leisure, and management succession through a non-profit public foundation are all untrue."

In an additional statement, KT&G said, "The data disclosed by FCP contains fundamental errors in the basic data itself, and the overseas business is generating a considerable level of profit," warning, "If false claims continue, we will be forced to take legal action."

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