A dispute over the management rights of T'way Air has officially begun. Daemyung Sonogroup sent a demand for management improvement to the current management. The main point includes a demand for the resignation of the existing management, including Vice Chairman Na Seong-hoon, as well as a request for financing through a paid-in capital increase.
On the 20th, according to the investment banking industry, Daemyung Sonogroup sent a certified document to the management of T'way Air that day to convey these demands.
Currently, the largest shareholders of T'way Air are Tway Holdings and YeaRimDang. The combined equity ratio of the two companies is about 30.07%. Daemyung Sonogroup is the second-largest shareholder with a 26.77% stake. It became a major shareholder after purchasing the equity held by private equity firm JKL Partners. The equity gap between the largest and second-largest shareholders is only about 3 percentage points, leading the market to consistently raise the possibility of Daemyung Sonogroup entering a management rights dispute.
Earlier, Daemyung Sonogroup was reportedly trying to negotiate to acquire the equity of the largest shareholder. However, Vice Chairman Na Seong-hoon of YeaRimDang was determined to protect the management rights, and ultimately, the two sides failed to reach an agreement.
Daemyung Sonogroup is reportedly asserting that T'way Air cannot be properly operated under the current management system, stating that it cannot guarantee aviation safety. In fact, the number of breakdowns and malfunctions at T'way Air is on a gradual increase. The incidents, which were only 33 in 2020, rose to 67 in 2021, and 68 in 2022. By 2023, there were 510 reported incidents, and last year, there were 315 cases reported only in the first half of the year.
As a result, Daemyung Sonogroup's demand is to implement a shareholder allocation paid-in capital increase to secure funds necessary for repairs and other expenses. They plan to participate in the paid-in capital increase as the second-largest shareholder to provide financing.
According to industry reports, Daemyung Sonogroup plans to take follow-up measures such as requesting the examination of the shareholder registry and proposing the selection of directors in preparation for the regular shareholder meeting scheduled for March, starting with this demand for management improvement.
T'way Air has imposed restrictions on the number of directors and excludes the cumulative voting system by its articles of incorporation. Since there is hardly any difference in the equity ratios of the largest and second-largest shareholders, the fate of the management rights is expected to be decided based on how the 46.5% of minority shareholders vote.