POSCO's restructuring plan angers Pohang residents
Politicians and residents from Pohang, North Gyeongsang Province, speak during a press conference at the National Assembly in Seoul, Thursday, to protest POSCO's plan to set up a holding company in Seoul. Courtesy of North Gyeongsang Provincial Government
By Park Jae-hyuk
POSCO is facing a severe backlash from residents and politicians in its home city of Pohang, North Gyeongsang Province, over its plan to set up a holding company in Seoul, while spinning off a subsidiary in charge of its successful steelmaking business.
North Gyeongsang Province Governor Lee Cheol-woo, Pohang Mayor Lee Kang-deok and lawmakers representing the city's residents made a statement at the National Assembly, Thursday, in protest of the envisioned relocation of POSCO's head office. The city's politicians also plan to visit the POSCO Center building in Seoul, where an extraordinary general meeting of shareholders is scheduled for Friday to vote on the spinoff plan.
They claimed that POSCO is disregarding Pohang citizens, who have endured pollution from POSCO's steel mill over the past half century, with the abrupt announcement of its restructuring plan late last year.
“For balanced regional developments, companies in the capital area should move to non-capital areas, but POSCO is trying to establish its holding company in Seoul and locate its R&D facility in the capital region,” the Pohang mayor said.
The North Gyeongsang Province governor described POSCO's plan as “retrogressive.”
“Through sincere communication, we hope POSCO's spinoff enables the development of Pohang,” Rep. Kim Jung-jae of the main opposition People Power Party (PPP) said.
They asked POSCO to stay in Pohang or come up with specific benefits for the citizens, if it wants the residents to accept its spinoff plan.
Politicians from Pohang, North Gyeongsang Province, pose with main opposition People Power Party's presidential candidate Yoon Suk-yeol, second from left, at the party's headquarters in Seoul, Thursday, after delivering their opinion on POSCO's plan to set up a holding company in Seoul. Courtesy of North Gyeongsang Provincial Government
They also met the PPP's presidential candidate Yoon Suk-yeol that day to deliver their opinion, but failed to meet POSCO Group Chairman Choi Jeong-woo as he was unavailable for the meeting.
The city's civic groups have taken a more hardline stance, compared to the politicians.
“We oppose POSCO's spinoff plan of the chairman, by the chairman and for the chairman,” three civic groups in North Gyeongsang Province said in a joint statement, Wednesday. “It will enable the chairman to tighten his grip on the board of directors and serve additional terms, avoiding investments in environmental and safety measures.”
POSCO has yet to deliver any official response to the Pohang residents and politicians.
“It is difficult to comment on this issue, because our spinoff depends on the results of Friday's shareholders meeting,” a POSCO spokesman said.
In order to achieve its goal, POSCO needs to win the support of more than two-thirds of the shareholders with voting rights present at the meeting and at least a third of the total outstanding shares.
The National Pension Service, which is POSCO's largest shareholder with a 9.75 percent stake, decided in its internal meeting earlier this week to vote for the spinoff plan. However, minority shareholders collectively holding a 70 percent stake may vote against the plan, as some of them have expressed concerns about a possible fall in POSCO's stock price after the spinoff.