Court Asks Children for Opinions... What Will Hankook Tire's Second Daughter Answer?

[Asia Economy Reporter Kiho Sung] Ahead of the adult guardianship trial for Cho Yang-rae, chairman of Korea Technology Group (formerly Hankook Tire Worldwide), it has been confirmed that the court has sought opinions from his children. The focus is on the stance of the second daughter, Cho Heewon. Since Cho, who holds more than 10% of the shares, could significantly influence the dynamics of the management dispute over Hankook Tire depending on whose side she takes.

According to the legal community on the 20th, the Family Division 20 of the Seoul Family Court, which is reviewing the petition to commence limited guardianship for Chairman Cho, registered the other three children as interested parties, excluding Jeong Gu-in, chairman of the Hankook Tire Nanum Foundation who filed the case, and reportedly sent each of them a request for submission of opinions regarding the commencement of the trial on the 11th. The request for submission of opinions typically requires submitting opinions to the court within 14 days, but it is also possible not to submit any opinion.

Previously, the eldest daughter, Chairman Cho Heekyung, and the eldest son, Vice Chairman Cho Hyunsik, who have expressed their opinions, are expected to support the petition. On the other hand, the second son, President Cho Hyunbeom, is likely to submit an opposing opinion.

The key interest lies in what position the second daughter, Cho Heewon, will take. The reason for the attention on her is that she is the third largest shareholder of Korea Technology Group, holding 10.82% of the shares. The second son, Cho Hyunbeom, president of Hankook Tire & Technology, who inherited all of their father's shares, currently holds 42.9%. Meanwhile, the eldest son, Cho, holds 19.32%, and the eldest daughter, Cho Heekyung, chairman of the Hankook Tire Nanum Foundation who first raised the issue, holds about 0.83%. Even combined, the eldest son and eldest daughter hold just over 20%, which is more than 20% less than the second son.

In this situation, if the second daughter, Cho Heewon, joins the eldest son and eldest daughter’s side, their combined shares would rise to 30.97%. Adding the 6.24% held by the National Pension Service brings the total to 37.21%, narrowing the gap with the second son to the 5% range. If they can persuade minority shareholders holding 17.57%, it is calculated to be a feasible challenge.

If the court accepts the adult guardianship application for Chairman Cho Yang-rae, Cho Heewon’s influence will grow even larger. In the event that through litigation the second son’s shares revert to 19.31% before succession, he would be at a disadvantage compared to the eldest son and eldest daughter.

So far, Cho Heewon has expressed a 'neutral' stance regarding this management dispute. If she continues to maintain neutrality, the second son, President Cho’s shares are overwhelming, making it highly likely that the management dispute will end as is.

The court previously received a fact-finding report from Gangnam-gu in mid-August confirming Chairman Cho’s residence, and once the children respond to the request for submission of opinions, the court plans to proceed with a procedure to verify Chairman Cho’s health condition based on that.