Hong sibling sells BGF Retail shares

By Park Hyong-ki

Hong Seok-hyun / Yonhap

Hong Seok-hyun, former chairman of JoongAng Media Group, and his younger sister Ra-young each sold their stakes in BGF Retail, according to news citing investment banking sources.

Hong unloaded his 3.97 percent share in the company, while his sister sold her 1.12 percent stake.

Both sold their BGF shares at a 9 percent discount via a block sale managed by Goldman Sachs.

Hong earned nearly 200 billion won, and his sister 55 billion won from the deal. Hong now owns a 3.16 percent stake and Ra-young 5.53 percent.

The rest of their shares will be locked up for about a year. This means they cannot sell the rest of their BGF shares during the period.

BGF Retail is a listed retail, food and logistics company run by Chairman Hong Suk-jo and President Park Jae-koo.

Suk-jo is Hong Seok-hyun’s younger brother. The BGF chairman owns a majority 55 percent stake in the company, according to a recent disclosure.

BGF Retail is widely known for its CU convenience stores, which hold a 33 percent market share. It also has business in golf and advertising.

Hong Seok-hyun and Ra-young were BGF’s second and third largest shareholders, respectively, before the block sale deal.

Hong Seok-hyun’s older sister is Ra-hee, the wife of Samsung Chairman Lee Kun-hee.

The siblings' shares liquidation is seemingly to help their brother Suk-jo to further solidify his ownership in the company, which will be split into two companies ― a holding firm and its unit overseeing BGF’s food and retail operations.

The company announced its split decision early this month via a regulatory filing as part of efforts to boost its transparency and business efficiency.

It said that it will relist its shares on the main bourse after the split.

The company added that it will split into two by November 2017, a few months after Hong Seok-hyun and his sister’s lock-up period comes to an end. BGF could not be reached for comment.

Analysts say that the company will inevitably see its shares fall in the short run following the liquidation.

But the process along with its plan for the split would enhance its governance.

“Uncertainty over the company’s governance has eased, which is likely to improve investors’ sentiment,” said Son Yoon-kyung, an analyst at SK Securities.

BGF’s CU was created after its contract to run Japan’s Family Mart expired in 2012. CU has 1,000 stores in Korea.