In a significant shift for Hansol Chemical, Chairman Cho Dong-hyuk has offloaded a portion of his personal stake in the company to GS Group. The deal, valued at 55 billion KRW, has resulted in the National Pension Service (NPS) becoming the chemical company’s largest shareholder. While the official reason cited for the sale is personal debt repayment, market analysts are also pointing to potential strategic motives related to corporate governance regulations.
The Transaction in Detail
The deal, which was officially announced on the 25th, saw Chairman Cho sell 310,910 shares, representing a 2.72% stake in the company. The shares were acquired by GS Holdings Corp. in an off-market transaction for 55 billion KRW, at a price of 176,900 KRW per share. This represents a 2.67% premium over Hansol Chemical’s closing price of 172,300 KRW on the day.
As a result of this sale, Cho’s personal holding has been reduced to 8.91%. The combined stake of the chairman and his related parties has consequently dropped from 15.07% to 12.33%. This has paved the way for the National Pension Service, with its existing 13.34% stake, to become the new largest shareholder of Hansol Chemical.
Stated Reasons and Strategic Speculation
Officially, the sale was motivated by Chairman Cho’s need to secure funds for personal debt repayment. This was not a surprise move, as Cho had already disclosed his intention to sell the shares for this purpose a month prior. It is understood that the chairman had taken out loans amounting to approximately 60 billion KRW over the past year, using his Hansol Chemical shares as collateral.
However, analysts in the market are suggesting the move may also be a savvy manoeuvre to navigate the country’s “3% rule.” This regulation, recently expanded under the revised Commercial Act, caps the voting rights of the largest shareholder and their related parties at 3% during the crucial election of audit committee members. By selling down his stake and relinquishing his position as the top shareholder, Chairman Cho is no longer bound by this specific restriction. This could potentially increase his effective influence over board appointments, especially if GS Group, as a friendly shareholder, votes in alignment with his interests.
GS Group’s Official Stance
For its part, GS Group has framed the acquisition as a straightforward investment. A representative from GS explained that Chairman Cho’s side had initiated the discussion, seeking to raise cash. “GS has been looking to invest in future growth sectors, and with our interest in the fine chemicals industry, we saw this as a simple and timely equity investment,” the official stated, clarifying that their motive was purely for investment purposes.