À̹ÌÁö È®´ë Kyobo Life Chairman Shin Chang-jae
Financial investors plan to take their complaints about Kyobo Life Insurance¡¯s delinquent returns in their investment to the arbitration court in an obvious show of skepticism about the No.3 industry player¡¯s IPO and other capitalization plans.
A consortium of investors is expected to submit their case to the Korean Commercial Arbitration Board this week as they see little progress in their talks with Kyobo Life Chairman Shin Chang-jae, according to investment banking sources on Monday.
The investors argued that Shin has continued to hold off providing concrete plans for reimbursement, such as pricing and schedule, and that they are forced to act out of fiduciary duty to their limited partners.
They said Shin¡¯s latest proposal still lacks substance and shows little improvement beyond the three plans presented earlier, which include the issuance of asset-backed securities, stake sale to third parties, and compensation of any losses after the IPO.
If the investors do take the case to court, the IPO plan for the second half cannot go through.
In 2012, a group of investors put their money behind the life insurer on the condition that the company goes public by September 2015. They were given put options, or the rights to sell their shares back to Shin, if the company does not complete the IPO by the given date.
The deadline of the IPO was pushed back to 2018. As the talks dragged on, some investors including Affinity Equity Partners, IMM Private Equity, Baring Private Equity Asia, and the Government of Singapore Investment Corp. insisted on exercising their put options, asserting a strike price of 409,000 won ($361.79).
Their collective action would require Kyobo Life to reimburse more than 1 trillion won, a staggering amount that could threaten Shin¡¯s management rights as he would have to cough up a significant portion of his 36.9 percent stake to meet the payment.
The court would consist of three arbitrators, one from each party and one independent arbitrator. The ruling on average takes seven months, ranging from five months to a year. The proceedings could be terminated if the parties reach an out-of-court settlement.
By Cho Si-young and Kim Hyo-jin
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