Activist hedge fund Korea Corporate Governance Improvement (KCGI) has acquired additional shares in Korean Air (KE, Seoul Incheon) parent Hanjin KAL amid increasing sabre-rattling ahead of a boardroom showdown later this month that will determine the conglomerate's future leadership.
KCGI subsidiary Grace Holdings raised its stake in Hanjin KAL to 17.68% after buying 0.54%, it said in a stock market disclosure on March 3.
The fund has teamed up with Hanjin heiress and former Korean Air vice president Cho Hyun-ah, 45, who owns a 6.49% stake in Hanjin KAL and Bando Engineering & Construction, which holds 13.3%, to dethrone Hyun-ah's brother Cho Won-tae, 44, from his current position as group chairman.
Cho Hyun-ah resigned from her own executive position in December 2014 following the "nut rage" incident, for which she served five months of a twelve-month prison sentence.
The KCGI-Hyun-ah coalition warned on March 3 that it would take legal action if any corporate funds or Hanjin companies and employees were "mobilised to aid Cho", saying that such an act "can be a serious crime", Pulse News Korea reported.
However, in a statement on March 4, Hanjin KAL recommended Cho Won-tae and also Ha Eun-yong, Korean Air's chief financial officer, as members of its boardroom ahead of the March 27 vote. One of three executive director posts remains vacant following the death of the feuding siblings' father Cho Yang-ho in April 2019, according to the Yonhap news agency.
"The recommendations are aimed at seeking stability in the management structure under the chairman's leadership and improving the group's financial status amid growing uncertainties," the statement said.
The latest stake purchase will not count as additional votes in the upcoming meeting, but it may build power for the Cho Hyun-ah alliance in future boardroom battles. The move follows Delta Air Lines, allied to the existing management, upping its stake in Hanjin KAL from 9.21% to 11% on February 21.
Chairman Cho's friendly stakes include family members excluding his sister (22.45%), Delta (11%), Kakao Corporation (2%), and Korean Air insurance, social and stockholders' associations (3.8%), totalling 39.25%, according to the Korea Herald. The opposing tripartite coalition holds a total of 37.47%.
