The fortunes of Kumho Petrochemical and OCI Holdings, which swapped treasury shares five years ago, have diverged. As OCI Holdings' stock price has surged on U.S. sanctions against Chinese solar corporations and the listing of SpaceX, Kumho Petrochemical stands to reap a huge capital gain, while OCI Holdings has seen the value of its equity shrink as Kumho Petrochemical's share price has stagnated.
According to the financial investment industry on the 21st, OCI Holdings closed at 271,500 won on the 18th. That is nearly triple compared with the roughly 100,000-won level at the start of the year.
With the U.S. government supporting domestic production facility investment through the advanced manufacturing production credit (AMPC) and regulating Chinese corporations and products, shares of OCI Holdings, which runs a renewable energy business in the U.S., are soaring on expectations of a spillover benefit.
The listing of SpaceX, a U.S. aerospace corporation, on the New York stock market has also been a boon. SpaceX plans to build large numbers of space data centers in Earth orbit equipped with solar panels and GPUs (graphics processing units). To do this, it plans to launch 100 gigawatts (GW) of solar installations into space every year. As a result, OCI Holdings, which makes polysilicon used in solar installations, has drawn attention.
Thanks to the rise in OCI Holdings' share price, Kumho Petrochemical is booking equity valuation gains. In 2021, the two companies swapped 31.5 billion won worth of treasury shares apiece under the pretext of cooperating on a joint venture for epoxy resin feedstock (ECH), among other projects.
In financial markets and the petrochemical industry, many interpreted the move as a decision by the two owners to secure friendly equity to bolster their control. At the time, Kumho Petrochemical Chairman Park Chan-gu was embroiled in a management control dispute with his nephew, former Executive Director Park Cheol-wan. OCI Holdings Chairman Lee Woo-hyun was also in an unstable position in maintaining control because he held less equity than his uncle, UNID Chairman Lee Hwa-young, or SGC Chairman Lee Bok-young.
The value of the 1.8% equity stake in OCI Holdings secured by Kumho Petrochemical has swelled nearly threefold, from the initial 31.5 billion won to about 81 billion won. In contrast, the value of the 0.7% equity stake in Kumho Petrochemical held by OCI Holdings has decreased to 21.9 billion won. That is because over the past few years the petrochemical industry has struggled with issues such as China's supply glut, weighing on Kumho Petrochemical's share price.
Some say Kumho Petrochemical, having ended the owner's management control dispute, could unwind its OCI Holdings equity to realize gains. With former Executive Director Park Cheol-wan's side having refrained from submitting shareholder proposals for two consecutive years, the market views the management control dispute as effectively concluded.
By contrast, OCI Holdings Chairman Lee Woo-hyun still needs friendly equity. Lee's equity ratio is 7.18%, still lower than UNID Chairman Lee Hwa-young's 7.87% and SGC Chairman Lee Bok-young's 7.82%. Although Lee is gradually increasing his OCI Holdings equity, the pace remains modest.
On the 11th, Lee bought 1,212 shares at 247,566 won per share, totaling 300 million won. With OCI Holdings' stock price having surged, it would inevitably be burdensome for Lee's side to buy back the entire equity holding that Kumho Petrochemical owns.
However, a Kumho Petrochemical official said, "As the joint venture is underway, there are currently no plans to sell the OCI Holdings equity." OCI Holdings also drew a line on the possibility of an equity sale.
Meanwhile, the business community expects that, with the enforcement of the amended Commercial Act, swapping treasury shares for purposes such as defending an owner's management control will become more difficult going forward.