Largest shareholder of Kumho Petrochemical goes after managerial control again

From left are former Kumho Petrochemical executive Park Chul-whan, Kumho Petrochemical Chairman Park Chan-koo and Kumho Petrochemical President Park Jun-kyung / Photos credited to Yonhap, courtesy of Kumho Petrochemical

Former Kumho Petrochemical Senior Vice President Park Chul-whan has teamed up with Tcha Partners Asset Management to initiate a move to raise the shareholder value of the petrochemical company and eventually take it over, according to industry officials, Friday.

Park, the largest individual shareholder of the petrochemical firm with a 9.1 percent stake, is a nephew of Kumho Petrochemical Chairman Park Chan-koo, who holds a 7.14 percent stake. Kumho Petrochemical President Park Jun-kyung, the son of Chairman Park, has a 7.65 percent stake.

On Thursday, Park and Tcha Partners formed a partnership for joint ownership of the stake in Kumho Petrochemical. By giving greater power over the firm to the activist fund, Park aims to enhance shareholder value.

Park and Tcha Partners now jointly hold a combined stake of 10.88 percent in the petrochemical firm.

"Tcha Partners and I have agreed that stocks of Kumho Petrochemical are being undervalued due to the board's lack of independence and its failure to properly perform its role," Park said in a statement.

He stressed that the obligation to retire treasury shares must be introduced to resolve the Korea discount, adding that he hopes activist funds like Tcha Partners become more active in protecting the rights of minority shareholders.

"Kumho Petrochemical's treasury shares that have not been retired amount to 18 percent of the total shares, and thereby create a possibility that these treasury shares could be unfairly used by infringing on the rights of minority shareholders," he said.

Park said as the largest individual shareholder of the company, he decided to delegate his shareholder rights to Tcha Partners to improve the company's corporate governance, while safeguarding the rights of minority shareholders and conducting oversight and checks on management.

"As a shareholder, I hope that Tcha Partners will continue striving for the improvement of Kumho Petrochemical's corporate governance structure and enhancement of management transparency, as well as maximizing shareholder value," the former petrochemical company executive said.

As Park delegated his shareholder proposal rights to Tcha Partners, the activist fund said it has made shareholder proposals for the agenda at Kumho Petrochemical's upcoming regular shareholders meeting slated for next month.

The proposals include amendments to the articles and bylaws of the company regarding the cancellation of treasury stocks and the appointment of outside directors to the audit committee.

However, Park said he does not have any plans to conduct a public tender offer or other moves for a proxy fight.

In response, Kumho Petrochemical said it is currently assessing the situation, adding that there are no specific plans yet regarding the issue.