Juchong D-4 Kumho Petrochemical Strikes Back with 'Shareholder Return'... 150 Billion KRW Treasury Stock Cancellation

"Increase in Earnings Per Share (EPS) After Share Repurchase"
"43.7% of Separate Net Income Returned to Shareholders"

Jonghoon Baek, President and CEO of Kumho Petrochemical. (Photo by Kumho Petrochemical)

[Asia Economy Reporter Moon Chaeseok] As Park Cheol-wan, the largest shareholder and former executive director who has announced a management rights battle against Kumho Petrochemical Chairman Park Chan-gu, criticized the company’s shareholder-friendly policies as insufficient day after day, the company has taken out the card of treasury stock cancellation. With four days left before the regular shareholders' meeting, the tension over 'shareholder returns' is intensifying.

On the 21st, Kumho Petrochemical announced that it would sign a trust contract to purchase treasury stocks worth 150 billion KRW for the purpose of shareholder returns. The company plans to start purchasing treasury stocks worth 150 billion KRW for cancellation purposes over about six months after the contract is signed. After the purchase is completed, all shares will be canceled through detailed resolutions and disclosures by the board of directors. The purchase through the trust will be conducted with three securities companies: Mirae Asset Securities, Samsung Securities, and Shin Young Securities.

According to the company, when treasury stocks are purchased and canceled, the number of circulating shares decreases, resulting in an increase in earnings per share (EPS) for shareholders, so this should be seen as a representative shareholder return policy of the company. Kumho Petrochemical stated that it achieved record-high sales and operating profits last year by capturing the opportunity of increasing global demand for high value-added products such as NB latex. In particular, NB latex showed meaningful results 14 years after Chairman Park proactively entered the business in 2007, recognizing the market’s growth potential, the company added. A Kumho Petrochemical official said, "We decided on this treasury stock purchase and full cancellation of the purchased shares as a way to give greater rewards to shareholders who sent trust and encouragement last year."

Furthermore, this year’s dividends are expected to be the largest ever. Ahead of the 45th regular shareholders' meeting to be held on the 25th, the company proposed dividends of 10,000 KRW per common share and 10,050 KRW per preferred share, which is more than double last year’s 4,200 KRW for common shares and 4,250 KRW for preferred shares. Adding the amount of treasury stocks scheduled for purchase and cancellation to the total dividend amount reaches 430.9 billion KRW. This corresponds to about 43.7% of the separate net income and is the largest scale in Kumho Petrochemical’s history. The company said, "Recently, the two major global proxy advisory firms ISS and Glass Lewis positively evaluated Kumho Petrochemical’s shareholder-friendly policies in their reports and recommended full approval of the company’s agenda at this year’s shareholders' meeting," adding, "The Korea ESG Institute also recommended approval, stating that the company’s shareholder return plan exceeds expectations."

CEO Baek said, "Kumho Petrochemical will do its best to implement sustainable shareholder return policies through various methods in the future."