Shareholders revolt at Samchully

By Kim Tae-jong

Minority shareholders and foreign institutional investors are united in demanding the CEO of Samchully, the nation’s leading city gas supplier, step down from his position, according to industry sources Friday.

The collective move came as four Korean minority shareholders and the Australia-based Hunter Hall Investment Management, have published nine demands ahead of the general meeting of shareholders in March.

This is the first time for minority shareholders to join hands with foreign institutional investors in an attempt to attack major shareholder management. Previously, the two groups only worked together for the acceptance of their demands during the general meeting.

The nine points include the dismissal of President and CEO Shin Man-joong and the appointment of outside directors.

Samchully is an important affiliate of the Samchully Group, whose co-chairmen, Yoo Sang-deok and Lee Man-deuk, have 11.6 percent and 7.9 percent stakes in their affiliate respectively as the largest and second-largest shareholders.

Gang Hyung-guk, one of the four Korean minority shareholders, said he has problems with the company’s management because of its disappointing stock price.

“Samchully’s total assets have quadrupled in the past 10 years, but its stock price is at the level of eight years ago, which is a result of it neglecting shareholders,” he said. “So, we propose to sack the CEO and appoint outside directors.”

He personally contacted and persuaded Hunter Hall Investment Management, which has a 7 percent stake, to join the collective move, and other local and international investors are expected to join them, he said.

To succeed in their plan, the stake of Gang and his alliance must reach over the 31.5 percent that the two major shareholders and management hold.

In response, Samchully denounced the move as a plot to seek higher dividends.

“The total dividends that they have asked for is 35.6 billion won, higher than the net profit of 35 billion won,” an official said. “If we pay them that, we can’t invest in any new projects, which will cause us damage and consequently hamper the firm’s growth in the long run.”

Market insiders believe the rebellion of minority shareholders and foreign investors in Samchully will affect other stockholders ahead of the general meetings of other firms next month, especially those that have reported disappointing performances.