As the deadline for a retrial in the asset division lawsuit between Chey Tae-won, chairman of SK Group, and No So-young, director of the Art Center Nabi, approaches in about a week, there is a growing sentiment in the business community that Chey is likely to appeal the ruling. He is required to pay 944 billion won (approximately $944 million) in asset division payments, and even if he sells his stake in SK Siltron, it may not be enough to cover the amount.
According to industry sources, the deadline for both parties to file an appeal regarding the retrial ruling is August 17. If neither side appeals or submits a waiver by that date, the ruling requiring Chey to pay No 944 billion won will be finalized. If either party appeals, the case will return to the Supreme Court for further judgment.
Chey has maintained that his shares in SK Inc. are considered 'personal assets' formed through inheritance and gifts, thus not subject to division.
However, the retrial court has determined that Chey's shares in SK Inc. are indeed subject to division. The court evaluated the value of SK Inc. shares as of April 16, 2024, the date of the conclusion of the appeals trial, and calculated the asset division payment at 944 billion won, which is one-third of the assessed value.
Industry analysts believe that Chey will struggle to liquidate assets to meet the 944 billion won payment. The most viable asset is the 29.39% stake in SK Siltron, which SK Group recently decided to sell to the Doosan Group. The value of SK Group's 70.6% stake in SK Siltron has been estimated at 2.3 trillion won, suggesting that Chey's stake could be worth approximately 957 billion won based on simple calculations.
Given that SK Siltron is a private company, Chey's shares will become 'dead shares' that do not allow him to significantly influence company management until the company goes public. Meanwhile, Doosan Group has announced plans to develop SK Siltron as a strategic asset without going public, considering market concerns about dual listings.
Ultimately, Chey faces the challenge of selling his remaining stake in SK Siltron to Doosan at a fair price before the transaction is completed in January of next year.
The issue is compounded by the fact that Chey did not purchase SK Siltron shares with cash in 2017 but secured them through a total return swap (TRS) agreement. This arrangement involved a special purpose company set up by securities firms that used SK Inc. shares as collateral.
Even if Chey sells his stake in SK Siltron to Doosan, industry estimates suggest that after deducting the purchase price, management fees, and taxes, he may only realize around 500 billion won. This leaves a remaining 400 billion won that he would need to borrow from investment banks or securities firms using SK Inc. shares as collateral. Although the stock price of SK Inc. has risen due to a semiconductor supercycle, repaying over 400 billion won in principal and interest through dividends remains a significant burden.
As SK Group plans substantial investments in AI semiconductors and data centers, industry analysts believe it is crucial to minimize variables that could impact management control. Chey may need to accept public backlash from the prolonged lawsuit and appeal to reduce the asset division payment to below 500 billion won.
Legal experts suggest that Chey’s team may challenge the asset division ratio determined by the retrial court, which reflects a fourfold increase in SK Inc. stock prices over the two years and three months from the conclusion of the appeals trial to the end of the retrial. If the Supreme Court finds issues with the valuation criteria, it could significantly reduce the asset division payment.
Following the retrial ruling, Chey stated, "The divorce process, which lasted nearly 20 years, was finalized last year with the Supreme Court ruling, and the asset division retrial ruling has been issued. I apologize for causing concern to many during this process."
* This article has been translated by AI.
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