This article was published on Jan. 21, 2025, at 8:42 a.m. on the ChosunBiz MoneyMove website.
Hanwha Group's third son, Vice Chairman Kim Dong-seon, is pushing for a management rights acquisition of OURHOME, and the investment conditions for IMM Credit & Solutions (ICS), a financial investor (FI) participating, have been set. The conditions stipulate that investment will be made in convertible preferred shares (CPS) and that the company must be listed with a minimum corporate value of 2 trillion won within the next five years.
Hanwha aims to sign a stock purchase agreement (SPA) with former Vice Chairman Gu Bon-seong, the first of four siblings, and Chairman Gu Mi-hyeon around Feb. 7-10. However, variables remain. The fourth sibling, former Vice Chairman Gu Ji-eun, is still maintaining their position that they have the right of first refusal concerning the shares of their other siblings, and it is known that they may apply for an injunction against the sale of equity after the SPA is signed.
According to investment banking (IB) industry sources on the 21st, Hanwha Group has confirmed that it plans to complete an initial public offering (IPO) within five years if it successfully acquires management rights of OURHOME. The deadline can be extended for an additional two years.
Hanwha Group is considering establishing a special purpose company (SPC) to acquire 57.85% of OURHOME for 860 billion won. Hanwha Hotels and Resorts and Hanwha Vision will acquire the ordinary shares of the SPC, which will then raise capital to receive an investment of 250 billion to 300 billion won from IMM Credit. IMM Credit is expected to invest in the form of convertible preferred shares.
Hanwha Group proposed a joint sale of equity to the fourth sibling, former Vice Chairman Gu Ji-eun, and stated that it will wait for a response until the 23rd. If former Vice Chairman Gu and the third sibling, Gu Myung-jin, agree to sell their equity, Hanwha is contemplating concluding the transaction by merging the SPC with OURHOME.
Since IMM Credit is an FI where investment revenue is crucial, Hanwha must guarantee a certain level of return. The average internal rate of return (IRR) agreed upon by both parties is 6%. This means that they must be listed with a corporate value of approximately 2 trillion won in five years. IMM Credit is conveying these conditions to institutional investors such as retirement funds and mutual aid associations to establish a project fund.
Hanwha intends to sign the SPA with former Vice Chairman Gu Bon-seong and Chairman Gu Mi-hyeon around the 7th of next month, if former Vice Chairman Gu Ji-eun does not exercise their right of first refusal by the 23rd. The target is to complete payment for the sale around April.
However, unlike Hanwha's position, former Vice Chairman Gu Ji-eun still believes that the right of first refusal remains valid. The former Vice Chairman's side is negotiating conditions with FIs such as Alpine Capital to exercise the right of first refusal. To purchase the shares of former Vice Chairman Gu Bon-seong and Chairman Gu Mi-hyeon through the right of first refusal, former Vice Chairman Gu must offer the same price of 860 billion won proposed by Hanwha.
The IB and legal circles believe that the former Vice Chairman Gu's side is likely to file for an injunction to prohibit the sale of shares by Gu Bon-seong and Gu Mi-hyeon. The timing of the injunction may occur after Hanwha signs the SPA with the first and second siblings.
To file a motion to prohibit the disposal of shares, former Vice Chairman Gu Ji-eun must legally possess the right to first refusal over their siblings' equity. It is known that former Vice Chairman Gu is likely to apply for an injunction based on the fact that the right of first refusal is stipulated in the OURHOME articles of incorporation. Article 9, Section 3 of the OURHOME articles states that 'in the event of a transfer of shares, the transferor must first offer to the shareholders in the shareholder register in proportion to each shareholder's shareholding, and if some shareholders decline to purchase shares, the remaining shareholders will be offered shares in proportion to their shareholding.'
On the other hand, Hanwha and the sides of former Vice Chairman Gu Bon-seong and Chairman Gu Mi-hyeon are insisting that 'equity sales cannot be restricted by means other than a board meeting.' Article 335, Section 1 of the Commercial Act states that 'shares can be transferred to others. However, a company may require approval from the board of directors regarding the transfer of the shares it issues as specified in its articles of incorporation.'