Gov't ordered to pay $32M compensation to U.S. Mason Capital

Samsung Electronics' Seocho office building in southern Seoul [YONHAP]

The Korean government has been ordered to pay $32.03 million to the New York-based hedge fund Mason Capital Management, as an international tribunal partially upheld the hedge fund’s $175 million damage suit. The claim stemmed from losses attributed to the 2015 merger between Samsung C&T and Cheil Industries.

The U.S. Permanent Court of Arbitration ruled Thursday that the Korean government should pay $32.03 million to Mason Capital in damages, representing 7 percent of its initial claim. Additionally, the government must reimburse the U.S. company $10.32 million in legal fees and cover arbitration expenses of 630,000 euros ($675,000).

The dispute was over a 2015 merger deal between two Samsung affiliates — Samsung C&T and Cheil Industries — that Mason Capital and another U.S. hedge fund, Elliott Investment Management, opposed, claiming the deal greatly undervalued Samsung C&T shareholders’ interests.

At the time, Mason Capital held a 2.2 percent stake in Samsung C&T, and Elliott held 7.12 percent.

Despite their objections, the deal was approved by the largest shareholder at the time, the National Pension Service (NPS). Both companies alleged that the former Park Geun-hye administration exerted pressure on the NPS to approve it.

Korea’s Ministry of Justice stated that it would closely review the ruling and announce further plans in the future.

Elliott also partially won a damage suit totaling $108.5 million against the Korean government from this deal in June.

In August, Korea’s Justice Ministry filed a suit to overturn the arbitration ruling with a court in the United Kingdom.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]