IMM blocks Teton from flexing muscle on Hanssem

Hanssem's headquarters in Seoul / Courtesy of Hanssem

By Park Jae-hyuk

IMM Private Equity defeated Teton Capital Partners in a legal battle to gain management control over kitchen furniture maker Hanssem.

During an extraordinary general shareholders' meeting, Monday, former KT Estate Chief Financial Officer Cha Jae-yeon was appointed as the furniture maker's new outside director, despite opposition from Teton, Hanssem's second-largest shareholder with a 9.23-percent stake.

“All items on the agenda were passed during the meeting,” an IMM official said. “Regardless of the result, we will continue to listen to Teton.”

Following the conclusion of the management control dispute, Hanssem's stock price dropped 2.14 percent to close at 91,600 won ($77), after rising briefly during morning trading. Management control disputes generally raise stock prices as each party attempts to win the hearts of minority shareholders by promising various benefits.

IMM is expected to accelerate its efforts to finalize the acquisition of the furniture company, as the private equity firm (PEF) successfully reshuffled Hanssem's board members according to its plan.

Since IMM decided in July to acquire a controlling stake in Hanssem, both the PEF and the furniture maker's management have faced growing calls from Teton to allow other shareholders to enjoy the profits of the sale.

Teton has complained about the buyer's plan to acquire the largest shareholder's stake for 220,000 won per share, without allowing other shareholders to sell their stakes at the same price.

In September, the U.S. hedge fund filed an injunction with Suwon District Court asking it to ban Hanssem and any affiliated persons from helping IMM conduct due diligence on the furniture maker before the acquisition. However, the court did not accept the request, because domestic laws do not mandate that the largest shareholder talk with other major shareholders before selling its controlling stake.

Last month, Teton criticized Hanssem's management again for dismissing its proposal for a vote on the appointment of Kyungpook National University Professor Lee Sang-hoon as the furniture maker's outside director.

Amid the intensifying conflict, the U.S. firm filed another injunction, asking the court to order Hanssem's management to give it access to a list of shareholders and to hire someone to inspect the shareholders' meeting.

“Hanssem's owner family marginalized other shareholders when selling their stake for 220,000 won per share,” Hannuri, the law firm representing Teton, said in a statement. “After the announcement of the sale, Hanssem's stock price dropped further from 117,500 won.”

In order to convince minority shareholders to entrust their voting rights, the law firm set up a website on behalf of Teton.

A separate group of minority shareholders, who deny their ties with Teton, also asked the National Pension Service (NPS) to vote against IMM during the Hanssem shareholders' meeting. The pension fund is the furniture maker's third-largest shareholder with a 6.9-percent stake.

“The NPS is responsible for maximizing shareholder value, instead of passively following the company's decision,” the group's leader, Park Jang-ho, said in a statement.

In response to the opponents, Hanssem's management came up with various measures to attract shareholders. The company promised last month that it will pay quarterly dividends from next year and raise its dividend payout ratio to above 50 percent.

It also vowed to repurchase its shares to raise its stock price by reducing the amount of stocks floating on the market.