End of Hanjin Group Management Dispute... KCGI Terminates Joint Holding Agreement

[Asia Economy Reporter Dongwoo Lee] The management dispute between Cho Won-tae, Chairman of Hanjin Group, and the so-called three-party alliance (former Korean Air Vice President Cho Hyun-ah, KCGI, and Bando Construction) has effectively ended after one year and three months.

On the 2nd, KCGI announced, "We have terminated the joint holding agreement among the shareholder alliance in accordance with the agreement." They added, "We will support the management's correct decisions aimed at improving Hanjin Group's governance structure and enhancing corporate value, and at the same time, as shareholders, we will continue to check and monitor areas that require improvement."

This signifies the dissolution of the three-party alliance that had been in conflict with Chairman Cho over management rights. It has been one year and three months since the shareholder alliance was formed in January last year, demanding improvements in Hanjin Group's financial structure and corporate governance. The respective Hanjin KAL shareholding ratios of the alliance members are KCGI 18.52%, former Korean Air Vice President Cho Hyun-ah 5.71%, and Bando Construction 18.19%.

Industry insiders analyzed that the termination of the joint holding agreement was due to the diminishing role of the three-party alliance following Korean Air's push to acquire Asiana Airlines, which removed the justification for confrontation over management rights. The Korea Development Bank supported Chairman Cho by participating in Hanjin KAL's third-party capital increase as the third-largest shareholder to facilitate the merger of the two companies. The three-party alliance lost momentum rapidly after losing an injunction lawsuit to prohibit the issuance of new shares, which they had filed to block the Korea Development Bank's participation in Hanjin KAL's capital increase.

At the recent Hanjin KAL shareholders' meeting, the three-party alliance did not propose any shareholder proposals, effectively signaling its dissolution process. Former Korean Air Vice President Cho Hyun-ah sold 55,000 of her Hanjin KAL shares over-the-counter to KCGI, marking the formal start of the alliance's breakup. Considering that the joint holding agreement of the three-party alliance prohibits individual acquisition or disposal of shares, this sale by former Vice President Cho was possible only with the consent within the alliance. However, KCGI emphasized that even after terminating the joint holding agreement, the three-party alliance will continue to play a role as shareholders.