[Exclusive] President Lee Boo-jin Takes Another 100 Billion Won Loan... Growing Inheritance Tax Burden

President Lee Boo-jin Secures 100 Billion KRW Mortgage Loan Last Month
Loan Amount Reaches 220 Billion KRW This Year, 320 Billion KRW Since Last Year
Funds Seem Intended for Inheritance Tax on Late Chairman Lee Kun-hee's Estate

Lee Boo-jin, President of Hotel Shilla

[Asia Economy Reporter Junho Hwang] It has been revealed that Lee Boo-jin, President of Hotel Shilla, took out a stock-backed loan worth 100 billion KRW last month. Following the passing of the late Lee Kun-hee, Chairman of Samsung Electronics, Lee, who is paying inheritance tax in installments, increased the loan amount compared to last year to prepare for the inheritance tax payment.

According to the electronic disclosure system on the 13th, Lee borrowed 100 billion KRW on the 19th of last month using 3,253,000 Samsung Electronics shares as collateral. This is an additional loan following loans of 50 billion KRW and 70 billion KRW secured on January 24th this year, backed by 1,177,000 shares and 1,831,000 shares respectively. Including the 100 billion KRW loan (2,532,000 shares) taken out last year, the total loan amount reaches 320 billion KRW. This corresponds to 15.87% of the 55,394,044 Samsung Electronics shares inherited from the late Chairman Lee that are now tied up as loan collateral.

This loan is also analyzed as a measure to prepare for the inheritance tax on the late Chairman Lee’s estate. Adding the 220 billion KRW loan received this year, the proceeds from the sale of Samsung SDS shares (in March) amounting to 192.72402 billion KRW, this year’s first half salary of 2.479 billion KRW, and the Samsung Electronics dividends expected to be received during the third quarter of this year (361 KRW per share) totaling 59.9 billion KRW, Lee will secure approximately 475.1 billion KRW in cash.

The inheritance tax for the late Chairman Lee’s estate, including Lee Boo-jin and other Samsung family members, is estimated at about 12 trillion KRW, with Lee Boo-jin reportedly bearing a tax burden of 2.6 trillion KRW. Since the tax must be paid annually in installments over five years starting from 2020, Lee is required to pay about 433.3 billion KRW in inheritance tax each year. The amount remaining after paying the inheritance tax is approximately 39.3 billion KRW, which is expected to be spent on loan interest, capital gains tax from share sales, and other expenses.

It appears that Lee Boo-jin was not able to avoid the impact of global tightening such as interest rate hikes. This loan was taken from Korea Investment & Securities, where the interest rate is 0.5 percentage points higher than that of previous lenders, Kyobo Securities and Hyundai Motor Securities. Kyobo Securities, which has been lending to Lee since January, increased the number of collateral shares and raised the interest rate from 3.75% to 4.25% after April. Although the loan scale is on a completely different level from typical mortgage loans and the interest rate can be considered very low, the interest burden is increasing due to the impact of rising interest rates.

Hotel Shilla responded to inquiries about Lee’s loan by stating, "We do not know about private matters."