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Shin Chang-jae, Chairman of Kyobo Life Insurance (Photo = Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] A ruling has been issued requiring Shin Chang-jae, Chairman of Kyobo Life Insurance, to repurchase investors' shares within 30 days based on a fair market value to be assessed by an external agency. This decision is linked to the long-standing dispute between Shin and financial investors (FIs) over a put option (the right to sell shares at a predetermined price).
According to industry sources on the 19th, the International Chamber of Commerce (ICC) Arbitration Tribunal ruled on the 17th (local time) in favor of Affinity Consortium (comprising Guardian Holdings, Baring PEA, IMM PE, and Henley Holdings), which had filed a claim against Shin. The tribunal ordered Shin to appoint an appraiser in accordance with the shareholders’ agreement and submit an appraisal report.
Additionally, the tribunal ruled that Shin would be required to pay a daily penalty if he fails to comply with the order.
The dispute over the put option between Shin and the FIs dates back to 2012. At that time, Affinity purchased a 24% stake in Kyobo Life Insurance from Daewoo International for 245,000 KRW per share and entered into a shareholders’ agreement with Shin. The agreement stipulated that if Kyobo Life Insurance did not go public by the end of September 2015, Affinity could exercise the put option and sell its shares to Shin.
However, Kyobo Life’s IPO did not materialize, and in October 2018, Affinity exercised its put option, submitting a per-share price of approximately 410,000 KRW (a total of 2.02 trillion KRW) the following month. Shin opposed the exercise of the put option, claiming it was invalid, which led Affinity to file for international arbitration through the ICC in March 2019.
This latest arbitration ruling follows the first arbitration decision issued in September 2021. In the first ruling, the tribunal recognized the validity of the put option under the shareholders’ agreement and affirmed that Affinity had validly exercised the option in 2018. However, it concluded that Shin was not obligated to purchase the shares at the price determined by Affinity because he had refused to appoint an appraiser, preventing the valuation process.
Following the first ruling, Affinity initiated a second arbitration, resulting in the tribunal’s recent decision mandating Shin to facilitate the valuation process and potentially pay the amount determined by the fair market value.
After the ruling, Affinity released a statement expressing hope that Shin would comply with the second arbitration decision promptly, resolving the dispute surrounding Kyobo Life Insurance.
In contrast, Shin expressed regret over the decision, stating that it ignored significant aspects of the first arbitration ruling. Shin’s representatives indicated they are considering legal actions, including seeking the annulment of the arbitration decision.
Moving forward, the key focus will be on appointing a valuation agency and determining the per-share value. Kyobo Life believes that the put option price will likely be set at a significantly lower level than the 410,000 KRW per share initially demanded by Affinity. The company stated that the fair market value determined by a third-party appraisal agency is unlikely to exceed the initial purchase price of 245,000 KRW per share.
Kyobo Life explained that when Affinity exercised the put option in October 2018, Deloitte Anjin appraised the fair market value of Kyobo Life shares at 410,000 KRW per share. However, this was significantly higher than the IPO target price range of 180,000–210,000 KRW at that time. Currently, Kyobo Life’s market value is estimated at 198,000 KRW per share, based on the company’s share buyback price in August of last year.
Despite the second arbitration ruling, Kyobo Life emphasized that major financial investors still trust Shin, ensuring that the company’s management rights and governance structure would remain largely unaffected.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
