Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
How SK chief can raise cash for divorce settlement
SK Group Chairman Chey Tae-won, left, and Art Center Nabi Director Roh Soh-yeong arrive at the Seoul High Court for the second mediation session in their property division case, June 15. Yonhap
By Lee Min-hyung
Chey weighs 3 ways to raise cash while protecting SK Group control
SK Group Chairman Chey Tae-won has secured critical breathing room in his decade-long divorce saga after filing a last-minute appeal to the Supreme Court against a 944 billion-won ($668 million) divorce settlement.
But the move leaves him with a fresh question: how to raise the cash.
Chey's side filed the appeal Friday, shortly before the midnight deadline, extending the legal battle that began in 2017 into what could become a decade-long dispute. The appeal also shields Chey from late-payment interest of about 130 million won a day, which would otherwise add another significant financial burden.
In July, the Seoul High Court ordered Chey to pay 944 billion won to his former wife, Roh Soh-yeong, in cash, as part of their property division.
Chey's most immediate option is a stock-backed loan.
Chey owns a 17.9 percent stake in SK Inc., the group's holding company, making him its largest shareholder. At a recent share price of 585,000 won, the stake is valued at roughly 7.6 trillion won, providing substantial collateral for financing.
The problem is that borrowing against the shares could expose Chey to another source of pressure: SK Inc.'s stock price. A significant decline could force him to provide additional collateral or repay part of the loan.
Chey already has roughly 21 percent of his SK Inc. holdings as collateral, further limiting how much he can rely on stock-backed borrowing.
Korea Times graphic by Bae So-young
His second option is to negotiate with Roh.
Rather than raising the entire amount in cash, Chey could seek to persuade Roh to accept a combination of cash and SK Inc. shares. The arrangement would substantially reduce his immediate funding needs.
The hurdle is Roh's reported insistence on receiving the settlement entirely in cash. Chey's side has reportedly offered to compensate her for potential losses if the value of transferred shares falls, but that may not be enough to change her position.
The third option is to sell part of his SK Inc. stake to a friendly investor.
If Chey ultimately has to sell shares to generate cash, who buys them could be more important than how many shares he sells. A sale to an activist fund or another investor seeking management influence could create a new threat to SK's control structure.
A strategic investor or financial institution aligned with the group, by contrast, could dilute Chey's direct stake while providing a supportive block of shares.
"The upcoming ruling is unlikely to lead to a serious management crisis at SK Group, as SK Inc. shares soared for the past few years, which makes Chey face much less financial burden than before," an industry official said.