Hanwha meets retail investors as spin-off plan draws backlash

Hanwha Corp. officials explain the company's spin-off plan during a meeting with its minority shareholders at NH Investment & Securities in Seoul, Wednesday. Newsis

Hanwha Group’s de facto holding company held a rare meeting Wednesday with minority shareholders amid calls for the conglomerate to revise its controversial spin-off plan, which critics see as an attempt to allow the chairman’s youngest son to independently manage certain affiliates.

A week after Hanwha Corp.’s board decided on Jan. 14 to spin off its machinery and services divisions into a separate holding company, the firm invited about 50 retail investors to discuss the plan. Before the meeting, Korea Corporate Governance Forum Chairman Lee Nam-woo criticized the spin-off as a maneuver to benefit the chairman’s three sons.

“The company needs eight holding firms — four for aerospace, shipbuilding, energy and finance, two for tech and life solutions, and two for construction and gunpowder,” said Lee, who heads the forum of capital market insiders and legal experts advocating better corporate governance in Korea.

He also called for higher dividends and a reorganization of the company’s board.

When announcing the spin-off plan, Hanwha Corp. pledged to cancel 456.2 billion won ($310 million) worth of treasury shares and pay at least 1,000 won per share in dividends. The company also hinted it could continue raising dividends as its subsidiaries grow.

“At the meeting, we explained that the primary goal of the spin-off plan is to optimize our business portfolio,” Hanwha Corp. said Thursday. “We also reaffirmed our commitment to enhancing shareholder value.”

The company noted that its share price jumped 25 percent on the day of the announcement, saying minority shareholders welcomed the plan.

However, its stock fell 3.77 percent the day after the meeting, even as the benchmark KOSPI index surpassed the historic 5,000-point mark.

To ease concerns among foreign investors, Hanwha Corp. also plans to hold roadshows in Hong Kong and Singapore from Jan. 27 to 30.