Request for Extraordinary Shareholders' Meeting to Appoint Former Chairman Lee Hojin as Registered Executive Director
Truston Asset Management, the second largest shareholder of Taekwang Industrial, is pushing for the return of former chairman Lee Hojin to management in order to normalize Taekwang Industrial's management, enhance shareholder value, strengthen the major shareholder's responsible management, and improve management transparency.
On the 20th, Truston announced through an open letter to shareholders that it has formally requested Taekwang Industrial to hold an extraordinary general meeting of shareholders to appoint former chairman Lee as a registered executive director. Truston holds a 6.09% stake in Taekwang Industrial.
Lee Sung-won, head of Truston ESG Asset Management Division, explained, "At last year's general meeting of shareholders, we appointed an independent outside director recommended by minority shareholders and have since worked with the company's management to enhance corporate value. However, all communication with Taekwang has recently been halted."
He added, "We have determined that the prerequisite for normalizing Taekwang Industrial's management and resolving the undervaluation of its stock is for former chairman Lee, who is the largest shareholder and exercises substantial influence, to officially return as a registered executive director."
Taekwang Industrial is currently undervalued, with a price-to-book ratio (PBR) remaining at 0.16 times. Its average dividend payout ratio over the past 20 years is also 1.5%, one of the lowest among listed companies in Korea. The proportion of non-operating assets is about 40%, relatively higher than other listed companies, and the treasury stock ratio reaches 25%. Improving asset management efficiency is an urgent task.
Although approximately 900 billion KRW in cash, exceeding Taekwang Industrial's current market capitalization, is expected to flow in at once from the recent sale of SK Broadband shares, Taekwang has not disclosed any concrete execution plans to enhance corporate value.
Lee said, "Since last year's general meeting of shareholders, we have discussed various measures with Taekwang Industrial's management and board of directors to resolve chronic stock undervaluation and restructure the business, including share buybacks and cancellations, establishing mid- to long-term dividend policies, and linking executive compensation to shareholder value. The shareholder return plan using proceeds from the SK Broadband sale was officially discussed to the extent that it was disclosed through board meeting minutes."
Although legal reviews on specific execution plans were completed, all communication has been halted since the sudden resignation of the CEO.
Former chairman Lee is the largest shareholder and a key stakeholder of the company, holding approximately 73% of shares on a beneficial ownership basis, including related parties. Truston believes he is the practical responsible person who can provide the firm leadership needed by Taekwang Industrial.
Lee said, "Recently, Taekwang Industrial has recorded losses for four consecutive years due to poor performance in core businesses such as textiles and chemicals, but it has failed to present any future vision for discovering new growth engines. To overcome this crisis and enhance shareholder value with a new vision, responsible management by the major shareholder is essential."
He explained, "I understand that former chairman Lee is currently serving as a management advisor to Taekwang Industrial and is exercising substantial influence over the company's management. We judged that it is better for him to participate as an official member of the board of directors and practice transparent responsible management rather than exercising influence without accountability in the current state."
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