Hoban Construction, "Acquires Shares of Hanjin Kal for Business Diversification"
KCGI "Sells Entire Stake to Buyer Capable of Checking Management"
[Asia Economy Reporters Junho Hwang, Soyeon Park] Hoban Construction, which has risen to become the second-largest shareholder of Hanjin KAL, the pinnacle of Hanjin Group's governance structure, has stepped forward as a "white knight" for Cho Won-tae, chairman of Hanjin Group. Hoban Construction held consultations with Hanjin Group before deciding to acquire the shares of Hanjin KAL held by the private equity fund KCGI.
A senior official from Hoban Construction said on the 29th, "Before deciding to acquire the shares, we met with Hanjin Group, but we did not meet with Bando Construction," adding, "It is fair to say that Hoban Construction is the white knight of Hanjin KAL."
Although controversy arose over a second management rights dispute as Hoban Construction became the second-largest shareholder (17.41%) of Hanjin KAL, Hoban Construction clearly drew a line. On the 28th, Hoban Construction and Hoban Co., Ltd. announced that they would acquire 9.4 million shares and 52,000 shares, respectively, from KCGI's holdings, disclosing their investment purpose as "simple investment." Through this transaction, Hoban Construction acquired a 13.97% stake and plans to acquire most of the remaining 3.44% stake held by KCGI in the future.
However, the spark of the management rights dispute has not been extinguished. KCGI stated, "Our principle was to sell all shares to a buyer who can effectively check the management when they make wrong decisions, and we expect the buyer to do so." If Hoban Construction teams up with Bando Construction (17.02%), the third-largest shareholder of Hanjin KAL who previously acted in concert with KCGI, they could exercise voting rights exceeding 30%. Chairman Cho's stake, including special relations, is 20.93%, and Delta Air Lines (13.21%) and Korea Development Bank (10.58%) are known to be friendly forces.
When Hoban Construction acquires the shares on the 4th of next month, KCGI's holding will drop to about 1%. KCGI announced that it achieved a 100% return on investment in Hanjin KAL. KCGI evaluated, "After working hard for three and a half years to enhance Hanjin KAL's corporate value, it has become difficult for Chairman Cho to make unilateral decisions solely for his own benefit."
Meanwhile, on the day before the news of Hoban Construction's share acquisition was revealed, Hanjin KAL's stock price closed at 59,400 won, down 7.19% from the previous day. As of 10:45 a.m. on the 29th, it is trading at 61,500 won, up 3.54% from the previous day.
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