SK Group Chairman Chey Tae-won bows deeply in apology for causing inconvenience through personal matters on June 17 (Courtesy of SK)
SK Group Chairman Chey Tae-won said on Monday the Seoul High Court had made a mistake on estimating the value of SK C&C, a business arm of the group’s holding company SK Inc., used as a basis for its ruling that ordered him to pay a record 1.38 trillion won ($1 billion) divorce settlement in cash to his wife.
SK C&C, formerly Daehan Telecom, is the key yardstick for estimating the contribution of his wife Roh So-young, a daughter of the late President Roh Tae-woo, since Chey’s father and SK Group founder Chey Jong-hyun died in 1998, 10 years afterr they married.
Junior Chey has secured 17.73% of the holding company SK through SK C&C.
At issue was how much Daehan Telecom was worth before and after he took over the group’s management in 1998.
The higher its value rose after 1998, the greater contribution he and his wife are believed to have made to its growth, so he must pay a bigger compensation for their divorce than he had estimated.
In the original verdict, the appeals court put the value of Daehan Telecom at 8 won per share in 1994 when it was set up; 100 won in 1998; and 35,650 won in November 2009 when it went public.
The valuation suggested Chairman Chey made substantia contributions to the company’s growth, so did his wife.
SK Group Chairman Chey Tae-won (left) filed a divorce suit against Roh So-young in February 2018,
VALUATION ESTIMATES
On Monday, the Seoul High Court amended its valuation estimates on SK C&C, reflecting Chey’s argument. It lifted the estimated 1998 value of then Daehan Telecom by tenfold to 1,000 won per share, downplaying his contribution to the company.
That means his wife must have made much lesser contributions to growing the company’s value than its earlier assessment.
But the court kept its ruling on the divorce settlement intact. Chey will submit his appeal to the Supreme Court this week.
SLUSH FUND
Chey also disputed the high court’s verdict that SK Group’s growth was credited in part to 30 billion won of slush money transferred by his father-in-law and former President Roh, as well as his government’s support. Roh served as South Korean President from 1988 to 1993.
In 1994, SK Group acquired the then country’s No. 2 mobile carrier, currently SK Telecom Co., from the government, which smoothed the textile-to-chemical group’s foray into the mobile telecom service market. Chey controls 30.57% of SK Telecom.
Chey leaves a news conference room on June 17
PREPARED AGAINST HOSTILE TAKEOVER BIDS
Before the group’s news conference on Monday, Chey said South Korea’s second-largest business group has a capacity and is ready to defend against takeover attempts, quelling concerns about his divorce battle potentially leaving the group vulnerable to hostile takeover threats.
The appellant court’s verdict spawned speculations that Chey may have to sell a substantial amount of his shares in SK Group units, particularly those in SK Inc., to raise the money ordered to pay to his estranged wife.
“We need to prevent hostile takeovers from taking place, but even if it happens, we have the capacity to protect against it. You don’t have to worry,” he told reporters, asked about the risk of being exposed to unfriendly takeover bids in the aftermath of his divorce.
Lee Hyung-hee, head of the social value commitment under SK’s top decision-making body Supex Council, added that the group has strategies ready to protect against hostile takeover bids.
Chairman Choi filed a divorce suit against Roh in February 2018, three years after he confessed to having a girl with his lover. In 2019, she filed a countersuit, demanding property division.
The ongoing disputes came as SK Group has embarked on a reshuffling process to focus on core units such as semiconductors and batteries.
By Hyung-Kyu Kim
khk@hankyung.com
Yeonhee Kim edited this article
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