|Hanjin Group Chairman Cho Won-tae, left, and his elder sister Hyun-ah, a former vice president at Korean Air / Courtesy of Hanjin Group|
By Jun Ji-hye
Hanjin Group Chairman Cho Won-tae has gained an advantageous position over a three-party alliance led by his elder sister and group heiress Cho Hyun-ah in a fight for control of the logistics-centered conglomerate, as a Seoul court ruled against the alliance, Tuesday, reducing its shares eligible for voting rights, industry officials said Wednesday.
The court ruling came ahead of a general meeting of Hanjin KAL's shareholders scheduled for Friday, during which time a vote will take place to decide Cho Won-tae's reappointment as chairman of the group.
Cho Hyun-ah, a former vice president at Korean Air who is backed by local activist fund Korea Corporate Governance Improvement (KCGI) and mid-sized builder Bando Engineering & Construction, has called for the need to replace the current leadership to improve the group's financial status and its shareholder value.
The Seoul Central District Court ruled against Bando Engineering & Construction's requrest for an injunction that asked for the company to be allowed to cast 8.2 percent of its votes.
The court ruled that the firm can only cast 5 percent of the votes, citing the Capital Markets Act that limits the voting right to 5 percent when a shareholder fails to report justifiable reasons for possessing more than 5 percent to the financial authorities.
The three-party alliance had originally secured voting rights for 31.98 percent of the shares, but the court decision reduced their proportion to 28.78 percent.
The court also ruled against a KCGI injunction that asked for banning a group consisting of Korean Air employees from exercising their 3.79 percent voting rights. The court said the employees were not the chairman's specially related persons.
Given that most Korean Air employees have appeared to support the current leadership, the group is highly likely to vote for Cho Won-tae to retain his top seat.
Together with the employees' shares, the Cho Won-tae side is believed to have secured total voting rights equal to 37.49 percent of shares, including those of Delta Air Lines.
Following the court ruling, the three-party alliance said in a statement, "We will continue to make every effort to normalize management of Hanjin Group during and even after the shareholders meeting."
Hanjin Group also issued a statement, saying it respected the judgment of the court.
"We ask other minority shareholders and institutional investors such as the National Pension Service to make a wise decision during the meeting," it said.