As the court ruled in the remand trial on the property partitioning between SK Group Chairman Chey Tae-won and Art Center Nabi Director Roh Soh-yeong that Chey must pay 944 billion won to Roh as a property partitioning payment, attention is focusing on where Chey will raise the partitioning funds. That is because it could affect control of the group.
In business circles, it is widely viewed that to raise the property partitioning payment, Chey is likely to take out a loan using shares of SK Co. as collateral or sell part of his equity in the company, which is the holding company of SK Group. It is a situation that could become a variable for the future governance structure.
The family division No. 1 panel of the Seoul High Court delivered the ruling at the remand trial hearing for the property partitioning lawsuit between the two, which began at 2 p.m. on the 24th. The court determined that the SK Co. shares held by Chey are subject to partitioning and set the property partitioning ratio at one-third for Director Roh and two-thirds for Chairman Chey. For any shortfall in the shares allocated to Roh, Chey must pay cash.
The valuation date for the shares subject to partitioning was set as Apr. 16, 2024, the date oral arguments concluded in the fact-finding trial (appeal) of the divorce case. The closing price of SK Co. that day was 160,000 won.
Before this ruling, the legal community's biggest question was what the valuation date would be if SK Co. shares became subject to partitioning. Chey's side argued it should be Apr. 16, 2024, when arguments in the previous appeal ended, while Roh's side contended it should be June 26 this year, when arguments concluded in the remand trial that reheard the property partitioning case.
On June 26, the closing price of SK Co. was 815,000 won, more than five times higher than the Apr. 16, 2024 closing price. Therefore, had the court sided with Roh that day, even if the partitioning ratio changed, Chey would inevitably have faced a situation of having to partition several trillion won in assets.
Chey avoided the worst-case scenario, but he now bears the burden of raising a property partitioning payment approaching 1 trillion won.
Most of Chey's assets are SK Co. shares, and he currently holds 17.9% of the total equity. The number of shares is 12,975,472. Reflecting the closing price of 630,000 won that day, the current value of his equity is 8.1745 trillion won.
He also holds 29.4% equity in SK Siltron. He owns shares of SK discovery as well, but the equity ratio is 0.1%, a minimal level.
In business circles, there is speculation that Chey is highly likely to take out a loan using SK Co. equity as collateral to raise funds for the property partitioning payment. The reasoning is that because SK Co. functions as the holding company at the apex of the group's governance structure, it would be difficult for Chey to sell these shares and lower his equity ratio.
If he takes out a stock-collateralized loan, he can maintain his equity ratio, but if the share price falls in the future, a financial institution could demand additional collateral. If the share price drops sharply, he would also be exposed to the risk of a forced sell-off. There is also the burden of paying interest of 8% to 9% annually.
Therefore, there are also expectations that Chey could sell equity. Selling equity is the fastest and most certain way to secure cash, but in that case, Chey's control over the group would weaken, and a flood of large sell orders in the stock market could cause SK Co.'s share price to plunge further.
Given that both a stock-collateralized loan and an equity sale involve trade-offs in the financial market, there is speculation that Chey will sell only part of his equity and raise the remaining property partitioning payment through a stock-collateralized loan.
Some also mention a sale of SK Siltron equity. In the investment banking (IB) industry, the corporate value of SK Siltron, excluding liabilities, is estimated at 3 trillion to 4 trillion won. Therefore, the value of Chey's equity is assessed at around the 1 trillion won range, meaning that selling SK Siltron shares would be the fastest and easiest way to secure the property partitioning payment.
However, in business circles, many believe he will not rush to sell his personal equity in SK Siltron, given that since last year SK Group and Doosan Group have consistently negotiated excluding the equity held by Chey.
Since last year, SK Group has been pushing to sell SK Siltron for rebalancing (business restructuring) and asset securitization to improve its financial structure, but the sale target was the remaining 70.6%, excluding the SK Siltron equity held by Chey.
A source in the business community said, "Chey remembers being attacked by Sovereign, a global hedge fund, in the early 2000s and having his management control threatened," and added, "Because SK Co. is directly tied to Chey's control of the group, I see little chance he will move to take out loans or sell equity." The person added, "Chey is also cautious about selling SK Siltron equity, so for the time being he will rack his brain over how to raise the property partitioning payment."