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| Hanjin Transportation Vice President Emily Lee Cho, left, and HYK Partners CEO Hahn Woo-jae |
Activist fund considers lawsuit against Hanjin Transportation
By Park Jae-hyuk
HYK Partners, the activist fund that is Hanjin Transportation's second-largest shareholder with a 9.79 percent stake, has publicly condemned the logistics company's recent decision to appoint Hanjin Group heiress Emily Lee Cho as the subsidiary's vice president.
The private equity firm (PEF) also disclosed the full text of a shareholder proposal it sent Wednesday to Hanjin Transportation's board of directors.
This was the first time for HYK to unveil details about its requests. When the PEF sent its first proposal to the logistics firm last December to call for the reform of its governance structure and an increase in shareholder value, both sides declined to disclose the specifics.
In a statement uploaded on its website, HYK said Cho's recent promotion can be interpreted as the owner family's attempts to intervene in the management of the firm.
"We do not want Hanjin Group owner family members to hit the headlines anymore for their misdeeds committed while they were meddling with the management of the group's affiliates," the PEF said.
The heiress, who is the younger sister of Korean Air owner Hanjin Group Chairman Cho Won-tae, faced severe criticism for allegedly throwing water in the face of a manager of Korean Air's advertising agency in 2018 and temporarily left the group. She returned in June 2019.
Market observers expect she will make an attempt to join Hanjin Transportation's board of directors during the regular general meeting of shareholders scheduled for March to tighten her control over the company.
HYK named three people ― KDI School of Public Policy and Management professor Park Jin, Kim & Chang lawyer Lee Je-ho and HYK CEO Han Woo-jae ― and asked Hanjin Transportation to give them board seats to prevent the owner family from making arbitrary decisions.
If the Hanjin Transportation board declines to send a reply to the proposal by Feb. 2, HYK will take legal action against the company.
A Hanjin Transportation spokesman said Thursday the company is reviewing the proposal.
Instead of making a public announcement on its response to its second-largest shareholder, the logistics firm said in its press release that it will invest 213.5 billion won ($194 million) in the automation of its logistics centers this year to increase its market share.
HYK is also attempting to entice domestic and foreign shareholders to defeat Hanjin Transportation's largest shareholder, Hanjin KAL, the group's holding company having a 24.16 percent stake.
Some of Hanjin Transportation's minority shareholders have already entrusted their voting rights to HYK, saying they will support the entity to raise the value of their shares. If HYK wins support from the National Pension Service (NPS) which owns a 6.2 percent stake and more minority shareholders, it may be able to force the owner family to hand over the board seats.
This means a larger influence over Hanjin Transportation for textile company Kyungbang, the virtual owner of HYK which invested 70 billion won in the PEF when it was established earlier last year. 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.
