Cheil plans pre-IPO stock split

Cheil Industries, formerly the de facto holding company of Samsung Group Everland, has decided on a stock split ahead of the company’s IPO by lowering the par value from 5,000 won ($4.90) to 100 won.

The move is to encourage increased trading of the company’s stock.

The decision was made at the company’s shareholders meeting yesterday at its headquarters in central Seoul.

Stock splits usually occur only when a company can’t or won’t issue additional shares to raise capital or its stock is priced so high that it discourages trading.

Shares of Cheil Industries are currently trading at 3 million won to 4 million won per share over the counter. But after the company goes public, the share value is expected to drop to 60,000 won to 80,000 won.

“We now can expect an easy flow in the exchange of stocks as the shares that are now traded in the millions of won will be lowered to below 100,000 won,” said a company official.

With the stock split, total issuance of Cheil Industries shares is expected to increase from 30 million to 500 million. Preferred stock will be increased from 2 million shares to 50 million.

The company plans to apply for a preliminary review at the Korea Exchange next month and have the company listed on the stock market in the first half of next year.

Currently, the largest stakeholder in the company is the apparent heir and Samsung Electronics Vice Chairman Jay Y. Lee with 25.1 percent. His sisters - Lee Boo-jin, president of Hotel Shilla, and Lee Seo-hyun, president of Cheil Industries - each owns 8.37 percent. Their father, Chairman Lee Kun-hee, owns 3.73 percent. When adding the families’ stake in the de facto company with that of other Samsung affiliates, the conglomerate’s total stake in Cheil Industries is 80.62 percent.

BY KIM YOUNG-MIN, LEE HO-JEONG [ojlee82@joongang.co.kr]