Kyobo Life: "Affinity and Anjin Not Guilty, Put Option 410,000 Won Does Not Mean Justified"

Expression of Regret over the Second Trial Acquittal Verdict

[Asia Economy Reporter Minwoo Lee] Kyobo Life Insurance expressed regret over the acquittal verdict for the Affinity Consortium and Anjin Accounting Corporation in the second trial of the put option dispute case. The company argued that this ruling does not mean that the put option price of 410,000 KRW proposed by Affinity is justified.

On the 3rd, Kyobo Life Insurance stated its regret regarding the acquittal verdict in the criminal trial of Affinity and Anjin Accounting Corporation officials, saying, "Although there was clear suspicion of inappropriate collusion, the conclusion reflects somewhat insufficient evidence."

They particularly emphasized that the trial result does not justify the put option exercise price (the right to sell shares at a specific price) of 410,000 KRW per share, which Affinity and Anjin allegedly colluded to calculate. This is because the International Chamber of Commerce (ICC) arbitration panel had already ruled that Chairman Shin Chang-jae of Kyobo Life Insurance was not obligated to purchase shares at 410,000 KRW. A Kyobo Life Insurance official said, "We regret the acquittal verdict despite multiple indications and evidence of collusion, but we respect the court's judgment. We expect a wise decision from the Supreme Court if the prosecution supplements the deficiencies through an appeal."

The dispute began at the end of 2018 when Affinity proposed a put option exercise price of 410,000 KRW per share for its 24% stake in Kyobo Life Insurance. This price far exceeded the original purchase price of 245,000 KRW per share. At that time, the expected initial public offering (IPO) price of Kyobo Life Insurance in the market was around 180,000 to 210,000 KRW per share (Credit Suisse) to 240,000 to 280,000 KRW (NH Investment & Securities).

Chairman Shin's side argued that the shareholder agreement related to the put option itself contained toxic clauses. The contract stipulated that if the difference between the fair market value (FMV) evaluations presented by both parties was within 10%, the average of the two prices would be considered the FMV. If the difference exceeded 10%, Chairman Shin could select one of three appraisal institutions proposed by Affinity, and the price evaluated by that institution would be the final FMV. They claimed this contract structure inevitably converged to the price level desired by Affinity, regardless of which price Chairman Shin submitted.

In response, Kyobo Life Insurance accused Affinity and Anjin of deliberately inflating the put option price and engaging in inappropriate collusion during the process. The prosecution, having launched an investigation, indicted the involved parties on charges of violating the Certified Public Accountant Act and sought prison sentences of up to one year and six months for the defendants.