Hoban Construction becomes Hanjin Kal's largest shareholder

Industry

Published: 29 Mar. 2022, 18:31

Hoban Construction becomes Hanjin Kal's largest shareholder

Employees enter Hanjin KAL's headquarters in Jung District, central Seoul. [YONHAP]

Hoban Construction is replacing the Korea Corporate Governance Improvement (KCGI) fund as Hanjin KAL's largest single shareholder, buying stock owned by the activist group and acquiring additional shares to add to the total.

Its acquisition of the stock could bring to an end a long period of uncertainty caused by shareholders forming alliances and battling for control of Hanjin KAL's board.

The construction company is acquiring a 13.97-percent stake in the company owned by Grace Holdings for 564 billion won ($462.4 million). Grace Holdings is a special purpose company wholly owned by KCGI.

The construction company will also buy newly-issued shares of Hanjin KAL and additional shares using a call option, adding another 3.38 percent and bringing the total to 17.35 percent.

Shares will be transferred on April 4, leaving KCGI with a 0.81 percent stake.

Hanjin KAL chairman Cho Won-tae and related shareholders together control 20.93 percent of the company.

KCGI said in a statement Monday that it "concluded it was the right time to exit the investment."

Hanjin KAL owns 27.66 percent of Korean Air Lines, which is currently merging with Asiana Airlines.

KCGI was involved in a shareholder feud between Hanjin KAL chairman Cho Won-tae and Cho Hyun-ah, his sister, in 2020 and 2021. KCGI and Bando Engineering & Construction formed a consortium with Cho Hyun-ah to jointly vote to oust chairman Cho Won-tae, claiming that the company was poorly managed under his leadership.

The coup failed and the alliance was dissolved.

Korea Development Bank, with 10.58-percent stake the fifth largest shareholder, has tended to vote with the chairman and has been supportive of the acquisition of debt-ridden Asiana Airlines. Delta Airlines, with 13.21 percent the fourth largest shareholder, also tends to vote in support of Cho.

The three shareholders have a 44.72 percent stake, larger than the total 38.63 percent that would be owned by a hypothetical consortium between Hoban Construction, Bando Engineering & Construction and Cho Hyun-ah.

If Hoban Construction votes with Cho Won-tae, the group would have a clear majority of the votes and be able to make board appointments and pass resolutions virtually unopposed.

Hoban Construction said in statement that it is a passive investor and has no interest in seeking to influence with its votes.

In 2015, Hoban Construction submitted a letter of intent to acquire Kumho Industrial — which owned 30.08 percent of Asiana Airlines at that time — for 620 billion won. The deal was scrapped due to creditors rejecting the bid.

In September last year, the company acquired an additional 29 percent in Seoul Shinmun, a newspaper company, for 60 billion won, bringing its total 53.4 percent.

Hanjin KAL shares jumped 6.23 percent to 63,100 won on Tuesday.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]