'Turned Away Shindongguk'... Hanmi Pharm Mother and Daughter Successfully Regain Management Rights

Mother and Daughter, Shindongguk Agree on 'Joint Exercise of Voting Rights'
Mother and Daughter's 6.5% Stake Sold to Chairman Shin
Transaction Amount at Least 138.4 Billion Won...Inheritance Tax Resolution Possible

The management dispute within Hanmi Pharmaceutical Group has entered a new phase. Shin Dong-guk, chairman of Hanyang Precision, who had been classified as an ally of the brothers' side, has abruptly switched to the mother and daughter side, enabling them to regain the status of the largest shareholder and reclaim management control.

Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group, Lim Joo-hyun, Vice Chairman of Hanmi Pharmaceutical Group, and Shin Dong-guk, Chairman of Hanyang Precision (from left), who agreed to jointly exercise voting rights of Hanmi Pharmaceutical Group shares

On the 3rd, law firm Sejong announced that Shin signed a stock purchase agreement to buy part of the shares of Hanmi Science, the group's holding company, held by Song Young-sook, chairman of Hanmi Pharmaceutical Group, and Lim Joo-hyun, vice chairman of Hanmi Pharmaceutical Group. The shares involved in this transaction amount to 4,444,187 shares, representing 6.5% of the total shares. Chairman Song will transfer 3,944,187 shares (5.8%), and Vice Chairman Lim will transfer 500,000 shares (0.7%). Additionally, both parties signed a voting rights joint exercise agreement to exercise voting rights together.

Thus, after the brothers' side won at the Hanmi Science shareholders' meeting in March and entered the company's board of directors, with director Lim Jong-hoon appointed as CEO of Hanmi Science, and the brothers subsequently entering the Hanmi Pharmaceutical board, the management dispute within Hanmi Pharmaceutical Group, which seemed to have been settled in favor of the brothers' side, has now entered a new phase. This is because the mother and daughter side quickly secured nearly a majority stake in the holding company’s shares.

On the same day, Chairman Song also disclosed a large shareholder report including Shin as a special related party. Accordingly, the combined shares of special related parties, including Chairman Song (11.93%), Vice Chairman Lim (10.43%) and their relatives, Gahyeon Cultural Foundation (5.02%), Im Seong-gi Foundation (3.07%), and Chairman Shin (12.43%), total 48.19%, approaching a majority of voting rights. The disclosed shareholding ratio is based on pre-transaction shares, and post-transaction shares are expected to be 6.16% for Chairman Song, 9.70% for Vice Chairman Lim, and 18.92% for Chairman Shin.

In particular, this contract allows the mother and daughter side to secure funds to pay inheritance taxes, thereby resolving the 'overhang issue' that has troubled Hanmi Pharmaceutical Group. The transaction amount is 164.4 billion KRW, with a per-share price of 37,000 KRW. This represents an 18.8% premium compared to Hanmi Science’s closing price of 31,150 KRW on the day. The mother and daughter side is expected to sufficiently cover their inheritance tax obligations with these funds.

Both sides explained the purpose of this contract, saying, "As the senior party holding the largest shares among those directly or indirectly related to the group’s management rights, we have formed a consensus on the confusion and crisis facing Hanmi Pharmaceutical Group," and "We have made a magnanimous decision for the sustainable development of Hanmi Pharmaceutical Group and enhancement of shareholder value." They added, "Since this contract was agreed upon abruptly, we hope Hanmi Pharmaceutical Group will develop into a sound company that will not yield to any external pressures in the future," and "Chairman Shin will actively fulfill his role and provide support to enable Hanmi to make a significant leap as a global pharmaceutical company through the introduction of a Korean-style advanced management system."

Both sides plan to establish a 'Korean-style advanced management system' where the founding family and major shareholders form the board of directors, complemented by professional managers. They intend to shift from the existing owner-centered management system to a field-oriented professional management system, and urgently stabilize management by enhancing business competitiveness and efficiency.