"Listen to Shareholders' Voices" Public Criticism
Kim Min-guk, CEO of VIP Asset Management, warned on the 20th that "if HL Holdings forcibly donates shares to the foundation without compensation, the damage to ordinary shareholders, concerns in the capital market, and the decline in both tangible and intangible corporate value will be at a very serious level."
On the same day, CEO Kim raised his voice publicly, saying, "I hope the company will listen to the voices of shareholders even now and make the right decision." VIP Asset Management is the second-largest shareholder with a 10.41% stake, following Chairman Chung Mong-won and his special relations (31.58%), the major shareholders of HL Holdings.
HL Holdings, the parent company of Mando, resolved at a board meeting on the 11th to donate 471,193 treasury shares, which is 84% of the 560,720 treasury shares it held in kind, to a newly established foundation without compensation. The company plans to cancel only the remaining 16%, or 90,527 treasury shares. When converted to cash, the approximately 470,000 treasury shares donated to the foundation amount to 16.3 billion KRW based on the closing price on the 8th. Dissatisfaction poured out in Naver stock discussion rooms where individual shareholders gather. Major shareholders such as VIP Asset Management and Baring Asset Management also share concerns about the issue.
CEO Kim said, "As the second-largest shareholder of HL Holdings, I was quite shocked to see the announcement of the foundation donation," pointing out, "The donation scale is 4.8% of the total issued shares, amounting to 16.3 billion KRW, and with the company's quarterly performance turning to a loss, it must additionally recognize a loss exceeding 30% of the three-year average net profit in its financial statements."
He added, "The company states that the foundation donation is a strategic choice to enhance the company's intangible value and sustainability, but the damage to shareholders is clear, while the potential benefits to the company are merely vague expectations. I question whether sufficient review has been conducted on this matter."
He continued, "Many market participants suspect that this treasury share donation is aimed at securing a white knight through the revival of voting rights," and added, "In this sensitive period when decisions favoring specific shareholders, such as Korea Zinc's rights offering and Doosan Bobcat's merger, are causing social outrage, it is regrettable that HL Holdings chose to do something that could be misunderstood."
CEO Kim also criticized HL Holdings' announcement of a five-year non-exercise policy on voting rights after the foundation donation. He said, "Regardless of whether shareholders exercise their voting rights, the treasury share donation must be withdrawn," and pointed out, "Attaching a time limit to not exercising voting rights is merely a stopgap measure to avoid the current crisis." Furthermore, he added, "The very mention of 'five years' in the interview clearly acknowledges that Chairman Chung Mong-won and the current HL Holdings management are the actual exercisers of voting rights, making it even clearer that the foundation lacks independence."
Earlier, in response to Asia Economy's inquiry about the foundation donation, HL Holdings stated, "We do not plan to exercise voting rights for at least five years after the foundation's establishment, and specific details will be discussed by the foundation's board and reflected in the articles of incorporation," adding, "It is regrettable that the intention has been interpreted differently from the original purpose." They also explained, "The acquisition of treasury shares itself is to enhance shareholder value, and establishing a nonprofit foundation for systematic social contribution is expected to improve intangible corporate value and long-term shareholder value."
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