Activist Fund Files Lawsuit Against Former and Current Directors of KT&G

Activist fund 'Flashlight Capital Partners (FCP)' is understood to have filed a lawsuit against former and current directors of KT&G, claiming they neglected to monitor the use of treasury shares, causing the company losses amounting to trillions of won.

KT&G

According to the financial investment industry on the 22nd, FCP sent a demand letter on the 10th to KT&G requesting the filing of a derivative lawsuit under the Commercial Act to hold directors accountable. The targets include 21 former and current inside and outside directors, including current KT&G President Baek Bok-in.

FCP alleges that from 2001, instead of utilizing approximately 10 million treasury shares of KT&G to enhance shareholder value through cancellation or sale, the board members, including President Baek, donated them free of charge to foundations and funds, causing damage to the company. The damage amount was calculated by multiplying the number of treasury shares used (10.85 million shares) by KT&G's recent stock price (applied at 90,600 won per share), totaling approximately 1 trillion won.

If the company does not file a lawsuit within 30 days from the date of receiving the demand, FCP can proceed with the derivative lawsuit.

Meanwhile, the company stated, "To fulfill corporate social responsibility, we donated some treasury shares for public interest corporations and to improve employee welfare," adding, "At the time of the donation, the board of directors resolved the related agenda following proper procedures in accordance with relevant laws and regulations."