[Featured Stock] T'way Air Soars 12%... Management Dispute Emerges Between 1st and 2nd Largest Shareholders

Reaction to Management Rights Dispute News
Next Year's Annual General Meeting of Shareholders, 'War' Predicted
Stocks Related to 1st and 2nd Largest Shareholders Hit Upper Limit

T'way Air surged 12%. The stock price appears to have been affected as the management rights dispute became visible. The stock prices of related stocks involving the first and second largest shareholders also surged.

As of 9:25 a.m. on the 10th, T'way Air was trading at 3,600 KRW, up 12.50% (400 KRW) from the previous trading day. Yerimdang, the largest shareholder holding a 29.97% stake in T'way Air, is hitting the upper limit (29.9%), and Daemyung Sono Season, an affiliate of Daemyung Sono Group?the second largest shareholder with a 26.77% stake?is also hitting the upper limit in early trading.

Before the market opened that day, news broke that Daemyung Sono Group was aiming for management rights of T'way Air. By acquiring shares from the private equity fund (PEF) operator JKL Partners at a premium, they narrowed the gap in shareholding with the largest shareholder Yerimdang to about 3%. They also exercised a call option early. In this process, they borrowed 50 billion KRW from Daemyung Station, a group affiliate and funeral service company. The purpose of securing management rights appears to be to enhance synergy between the airline and overseas resorts.

Daemyung Sono Group is expected to move to secure control of the board of directors starting from the regular shareholders' meeting in March next year. Among the seven registered executives of T'way Air, four will have their terms expire in March next year. The industry views that since 2011, Chairman Seo Jun-hyuk of Daemyung Sono Group has been pursuing the airline business as one of his long-cherished projects. Daemyung Sono Group oversees 26 affiliates, including 18 domestic resorts and hotels, as well as food service, distribution, and funeral services.