Park Chul-whan, the nephew of Kumho Petrochemical Co.'s former Chairman Park Chan-koo, has launched a proxy fight jointly with an activist fund, fueling speculation that the company’s former senior vice president is readying his return to the company nearly three years after his dismissal from the post.
According to a regulatory filing on Thursday, Park Chul-whan, the former senior vice president of Kumho Petrochemical and its largest shareholder with 9.10%, has entrusted his shareholder rights to Tcha Partners Asset Management Co. after adding the Seoul-based activist fund as the seventh person to his special relationship group.
The asset manager specializing in alternative investment purchased Kumho Petrochemical’s shares in the market last week to own a 0.03% stake.
On behalf of Park, the activist fund last week sent out a proxy statement demanding the company retire the company's entire 18.4% treasury share stake to improve shareholder value along with the appointment of an audit commissioner and a change in articles, according to the filing.
Shareholders will cast a vote on the proposals during the company’s general shareholders meeting in March.
Park’s latest move is speculated as a fresh attempt to challenge his uncle and former Chairman Park Chan-koo over Kumho Petrochemical’s management control.
Park Chul-whan, the nephew of Kumho Petrochemical's former Chairman Park Chan-koo The ex-senior vice president has raised several proxy battles to take a grip on the company since 2021 but his previous attempts failed.
OUSTED NEPHEW BY HIS UNCLE
The younger Park is the son of Kumho Petrochemical’s late Chairman Park Jeong-koo, an older brother of former Chairman Park Chan-koo.
Following his father’s death, the younger Park’s uncle Park Chan-koo took the helm of the company and offered his nephew joint management and control.
But the promise was never kept and the nephew severed his special ties with his uncle in 2021 after witnessing his uncle’s bid to hand over the throne to his eldest son Park Jun-kyung a year earlier.
The disappointed nephew immediately launched a proxy war in 2021, asking shareholders to vote for his proposals to appoint him as the company’s executive director and allow him to receive bigger dividends during a general shareholders meeting in the same year.
His attempt, however, failed and he was removed from his position as senior vice president in charge of the company’s overseas synthetic rubber sales in March 2021.
The uncle’s eldest son Jun-kyung was, however, promoted as the company’s president and joined the board of directors as an executive director later in an apparent attempt to accelerate a family succession.
Park Chan-koo and his two sons together own a 15.7% stake, while Park Chul-whan and his apparent allies jointly hold 10.8%.
The National Pension Service, Korea’s biggest institutional investor and the company's second-largest shareholder with 9.3%, is deemed to hold a casting vote. Minority shareholders and foreign investors also own 25% and 20%, respectively.
NEW PROPOSALS
During this year’s proxy season, the ousted nephew will raise the issue of the treasury stock swap between Kumho Petrochemical and OCI Holdings Co. in late 2021.
Following the swap, OCI holds a 0.56% stake in Kumho Petrochemical, which owns a 1.25% stake in OCI in return.
Park Chul-whan attests that the treasury stock swap was intended to enhance majority shareholders’ management control, allowing OCI to serve as a white knight of the petrochemical ally.
(Courtesy of News1 Korea) He is expected to suggest the appointment of an audit commissioner who will lead the retirement of the company’s entire treasury shares in a bid to improve shareholder value instead of strengthening management control.
Thanks to the Korean government’s move to prop up the nation’s underperforming stocks announced early last month, Kumho Petrochemical’s shares rallied in January despite its poor earnings.
The so-called value-up program to be introduced by the government targets low price-to-book ratio (PBR) stocks to help them regain ground in the stock markets. A PBR under 1.0 is considered undervalued so stocks with low PBRs are also considered good investments by value investors.
As of the third quarter of last year, Kumho Petrochemical’s PBR stood at 0.58, triggering investors to gobble up its shares on expectations of the company’s better returns for its shareholders.
The treasury share cancellation is also a way to bolster the company’s shareholder value, the ousted executive argued, expecting other shareholders to eagerly join him in a new proxy fight against his uncle this year.
Kumho Petrochemical shares ended up 4.2% at 141,800 won ($106.38) on Thursday. Since the first trading session in January, the stock has added more than 8%.
