Shin Chang-jae, chairman of Kyobo Life Insurance, will repay investment funds from the financial investor (FI) private equity fund (PEF) manager Apalma Capital. He will buy back the shares at half the price of the put option exercise price that Apalma originally proposed.
Chairman Shin is currently continuing a put option dispute with the Affinity Equity Partners consortium, and it is expected that he will use the contents of this contract to calculate the put option price with Affinity. There is a high possibility that this will be used as evidence for the claim that the appropriate market price is only 198,000 won per share. However, in the case of the Affinity consortium, regardless of what Chairman Shin sets the put option exercise price at, the price must be guaranteed at 245,000 won per share.
According to the investment banking (IB) industry on the 9th, Chairman Shin's side is known to have entered into a contract to repurchase 5.33% of the shares of Kyobo Life Insurance held by Apalma for a total of 216.2 billion won on the 7th. The transaction price per share was 198,000 won.
Previously, Apalma acquired its shares in Kyobo Life Insurance for 185,000 won per share in 2007. This is a separate transaction from the one the Affinity consortium invested in 2012.
Afterward, Apalma exercised a put option in 2018 asking Chairman Shin to buy back the shares of Kyobo Life Insurance for 397,893 won per share. When Chairman Shin's side rejected this, Apalma applied for international arbitration to the International Chamber of Commerce (ICC) the following year.
As both sides agreed to settle and sell the shares at 198,000 won per share, the international arbitration is expected to be withdrawn. Chairman Shin plans to repay Apalma's investment funds by securing 200 billion won, with 100 billion won each from Shinhan Investment Corporation and Korea Investment & Securities.
Chairman Shin is continuing the put option dispute not only with Apalma but also with the Affinity consortium (Affinity, IMM Private Equity, EQT Partners, Singapore Investment Corporation). The consortium had previously acquired 24% of Kyobo Life Insurance's shares at 245,000 won per share in 2012. The consortium also applied for international arbitration to the ICC, and a second judgment was recently made. The judgment effectively favored the consortium, stating that Chairman Shin must appoint an appraiser within 30 days to submit an evaluation report on the put option price. However, Chairman Shin's side has appointed EY Hanyoung as the appraiser but has not yet submitted the evaluation report.
In the IB industry, it is believed that the 198,000 won per share that Chairman Shin's side has agreed to pay Apalma will likely be used as the market price for Kyobo Life Insurance. Until now, Chairman Shin's side has claimed that the put option exercise price could not exceed 200,000 won.
However, regardless of what price Chairman Shin's side sets for the put option exercise, the final exercise price cannot go below 245,000 won. If the new price proposed by Chairman Shin's side through EY Hanyoung differs by more than 10% from the consortium's price (410,000 won), a third-party external evaluation agency will reevaluate the price, and if this reevaluated price is lower than 245,000 won, the final put option exercise price will be set at 245,000 won.