Shareholder activism intensifies on Hanjin's 'water rage' heiress

Hanjin Transportation Vice President Emily Lee Cho, left, and HYK Partners CEO Hahn Woo-jae

HYK Partners joins hands with minority shareholders

By Park Jae-hyuk

HYK Partners, an activist fund that is Hanjin Transportation's second-largest shareholder with a 9.79 percent stake, has joined hands with minority shareholders to exert a stronger influence over the management of the logistics arm of Hanjin Group.

The move comes as an apparent countermeasure against Hanjin Transportation Vice President Emily Lee Cho's ongoing attempts to tighten her control over the company.

The private equity firm (PEF) recently opened an official website as a follow-up to a proposal sent to the Hanjin Group's logistics arm last month to demand a board seat and the separation of ownership and management. According to industry sources, Hanjin Transportation sent a reply to the HYK's proposal, although both sides declined to disclose the specifics.

HYK is attempting to entice domestic and foreign investors, given its site has a webpage that enables shareholders to offer their personal information, such as their names and shares. It has another webpage for Hanjin Transportation employees and customers to make suggestions to the company.

The PEF plans to open an English site soon for foreign investors.

"As the second-largest shareholder of Hanjin Transportation, we would like to disclose our suggestions and share various opinions with other shareholders to reform the company's governance structure and increase shareholder value," HYK wrote on the website.

Some of Hanjin Transportation's minority shareholders have already entrusted their voting rights to HYK, saying they support an entity that can raise the value of their shares.

The activist shareholders are expected to intensify pressure on the Hanjin Transportation vice president, also known as Cho Hyun-min, the younger sister of Korean Air owner Hanjin Group Chairman Cho Won-tae.

The heiress, who once faced severe criticism for allegedly throwing water in the face of a manager of Korean Air's advertising agency in 2018, was promoted to the logistics firm's vice president in late December.

This came a month after the Korea Development Bank (KDB) forced her to stay out of Hanjin Group's aviation business, when the state-run lender announced its plan to help Korean Air take over Asiana Airlines.

Following her resignation as an executive of the group's holding company, Hanjin KAL, and Topas, the group's travel information provider, Hanjin Transportation reinforced departments under her supervision in its latest reshuffle this month.

Market observers expect Cho will make an attempt to join Hanjin Transportation's board of directors during the regular general meeting of shareholders scheduled for March, although the company said nothing has been decided about this.

Minority shareholders have urged HYK to prevent her from participating in management.

They are also paying attention to the next step of the National Pension Service (NPS) owning a 6.2 percent stake in Hanjin Transportation because the pension fund stood against Hanjin's owner family this month by voting against Korean Air's capital increase for its Asiana Airlines acquisition.

If HYK wins support from other shareholders, such as the NPS, GS Home Shopping and more minority shareholders, the Hanjin Group owner family will likely be forced to give a board seat to the PEF.

This means a larger influence for textile company Kyungbang, the virtual owner of HYK which invested 70 billion won ($64 million) in the PEF when it was established earlier last year, over Hanjin Transportation. Kyungbang is seen as the de facto second-largest shareholder of Hanjin Transportation because its entire stake in the logistics firm was sold to HYK in October.

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