Hanjin Group Chairman Cho Won-tae is expected to safely protect his management control from an alliance led by his older sister at an upcoming shareholders meeting upon a string of court rulings giving him the upper hand.
The Seoul Central District Court on Tuesday rejected the request of Bando Engineering & Construction (Bando E&C) subsidiaries to enable them to act the voting power in 8.28 percent stake in Hanjin KAL, the holding company of Hanjin Group, purchased in recent months in Friday’s general assembly which will be voting to extend the board term of Cho.
Bando E&C, a member of the three-way alliance led by Cho’s older sister Hyun-ah, upped its holdings in the transportation holding company to 8.28 percent in October last year and disclosed the purchase was simple investment.
The court concluded that Bando cannot act voting power over management issue with the shares bought purely for investment.
The builder’s chairman had demanded rights to appoint Hanjin Group’s honorary chairman and senior executives in his meetings with Cho Won-tae and his mother since Dec. 16, showing the intention “to influence the management of Hanjin KAL,” said the court.
The builder changed its purpose to management participation on Jan. 10, violating the duty to report the change within the five days, which is why the plaintiff is not allowed to exercise the voting rights on its holdings of exceeding the 5 percent limit, added the court.
The decision has lowered Bando E&C’s voting shares at the upcoming shareholders meeting to 5 percent.
Separately, the court on the same day also dismissed the request of Grace Holdings, a wholly-owned subsidiary of Korea Corporate Governance Improvement (KCGI) on the challenging front, to prohibit the Korean Air Lines employee union and insurance fund from exercising voting rights on their combined 3.79 percent stake.
(From left) Hanjin Group heiress Cho Hyun-ah, KCGI CEO Kang Sung-boo and Bando Engineering & Construction Co. Chairman Kwon Hong-sa.
There are no hard facts that the employee union and insurance fund are specially related parties to Chairman Cho, the court said, as they announced earlier that their votes will be casted for or against each of the issues on the agenda.
With the decisions, Cho is positioned better to win the proxy battle against the heiress union. The defending chairman has mustered a combined 37.88 percent stake in his favor with the support of Delta Air Lines (10 percent), Kakao (1 percent) and other family members of his mother Lee Myung-hee and younger sister Cho Hyun-min plus specially related persons and parties (22.45 percent).
His older sister Hyun-ah and her backers KCGI and Bando E&C have a total 28.78 percent stake, eligible for voting in the upcoming shareholders’ meeting due to be held on Friday.
Hanjin KAL in its letter to the shareholders on the day urged strong support for the current management, saying the three-way alliance has no understanding of the aviation business and thus the group could go bankrupt under the control of them.
On Wednesday, Hanjin KAL shares closed up 6.34 percent at 45,300 won ($36.81). Those of its subsidiary Korean Air Lines, Korea’s biggest full-service carrier, ended 15.67 percent higher at 17,350 won.
By Song Gwang-sup, Chung Hee-young, Choi Keun-do and Lee Ha-yeon
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