Chey Tae-won, chairman of SK Group, filed a further appeal against the remand court ruling in the 944 billion won property partition case with Art Center Nabi director Roh Soh-yeong. Chey's side said it decided to file the further appeal after careful deliberation, considering several circumstances, and noted it would seek to minimize negative effects on shareholders and the group's management during the proceedings.
According to the legal and business communities on the 14th, the chairman's legal team filed a notice of appeal with the Seoul High Court in the afternoon. The legal team said, "Chairman Chey submitted the appeal after careful consideration of several circumstances," and added, "We will proceed with the next steps with the aim of minimizing negative effects on shareholders and the group's management."
The background to the decision to further appeal is said to include whether the remand court's property partition ratio was appropriate, the potential impact on group management and the stock market of raising the roughly 1 trillion won partition payment in cash, and the breakdown of talks with Roh's side over payment methods.
◇ 30 billion won excluded but 35%→33.3%… partitioning ratio back to the Supreme Court
On the 24th of last month, the Seoul High Court's Family Division 1 set the property partition ratio for Chey and Roh at two-thirds and one-third, respectively, and ordered Chey to pay Roh 944 billion won in cash. Compared with the 35% share for Roh set by Family Division 2 of the Seoul High Court in May 2024, it fell by about 1.7 percentage points.
Chey's side is said to believe it is necessary to have the appropriateness of this ratio calculation reviewed again. In October last year, the Supreme Court's First Division quashed and remanded the case, ruling that the 30 billion won support from former President Roh Tae-woo's side could not be seen as contributing to Roh's property formation. Even though the 30 billion won was excluded as a contributing factor, Roh's share only slightly decreased from 35% to about 33.3%.
A further issue for review is that the remand court took into account the rise in the price of SK㈜ shares after the divorce was finalized when calculating the partition ratio. Chey's side is said to believe it is necessary to obtain the Supreme Court's judgment on whether it is appropriate to reflect subsequent price changes in listed shares, which are highly volatile, in the partitioning ratio. It is also said to have considered that the price of SK㈜, which was in the 800,000 won range at the close of arguments in the remand trial, has now fallen to the 500,000 won range.
◇ "Minimize effects on shareholders and group management"… proposal to pay part in shares also fell through
Chey's side directly mentioning "negative effects on shareholders and the group's management" in its statement is seen as reflecting concerns about the burden that could arise while raising 944 billion won in cash.
For Chey to raise cash close to 1 trillion won in a short period, it may be necessary to finance against or sell part of SK㈜ shares. In that case, Chey's side is said to have judged it must consider both the potential impact on the chairman's control over the group and the shock that a large volume of selling could have on the stock market.
If Chey were to sell a large block of SK㈜ shares, the pre-disclosure system for insider transactions would also have to be considered. If either 1% of equity or a transaction amount of at least 5 billion won is met, in principle the trading plan must be disclosed at least 30 days before the scheduled trading date. The burden also includes the possibility that if a large equity sale plan becomes known in advance, growing overhang concerns could affect the share price.
Considering these circumstances, Chey's side proposed to Roh's side a plan to pay part of the partition amount in shares, but they reportedly failed to reach an agreement. Roh's side is said to have maintained the position of receiving the entire 944 billion won in cash, as ruled by the remand court.
◇ SK Siltron also at issue… likely to dispute acquisition timing and valuation again
Chey's side also appears likely to contest in the further appeal the inclusion of SK Siltron equity in the assets subject to partition and the method used to value it. Chey acquired SK Siltron equity through a total return swap (TRS) contract in 2017, when the marriage had already broken down, and the argument is that Roh neither took part in the contracting process nor contributed to maintaining or increasing the asset.
They also reportedly take issue with valuing the SK Siltron equity at about 750 billion won. Because Chey's equity carries no control premium, its actual value could be lower, and after accounting for taxes during a sale, the cash that could actually be realized may fall far short of the appraised value.
With the further appeal, the 944 billion won property partition ruling is not yet final. Once the case records are sent to the Supreme Court, Chey's side is expected to set out specific grounds for objection regarding the partition ratio and the scope and valuation methods of the assets in its appeal brief.