SK C&C Rushing to Change into Holding Company System

Holds investor relations session prior to listing the company

SK C&C is accelerating its bid to list itself in order to transform the SK Group into a holding company system. SK C&C Vice Chairman Kim Shin-bae will participate in investor relations sessions, to be held soon in Korea and abroad, in the run-up to listing SK C&C on the Korea Exchange.
This move will likely speed up the SK Group’s bid to transform itself into a holding company system, industry and corporate analysts said.
SK Telecom and SK Networks’ disposal of stakes in SK C&C plus the listing of SK C&C ― discontinuing a virtuous cycle of cross investments into the group’s subsidiaries ― is requisite for establishing a holding company system. In this regard, SK Telecom and SK Networks are expected to acquire approximately 600 billion won and about 300 billion won in cash, respectively, from the disposal of stakes in SK C&C.
Industry sources said SK C&C will likely soon hold a series of investor relations road shows in the United States, Hong Kong and Singapore in which SK C&C Vice Chairman Kim and other executives will attend. The road shows will be held as planned regardless of the status of the listing of SK C&C, SK Group officials said.
SK C&C is expected to soon submit to financial authorities documents for its listing. Details, including subscription prices, are now being fine-tuned. Subscription prices are likely to be determined somewhere between 40,000 won and 50,000 won during an extraordinary board meeting.
An SK Group official said, “The SK Group has decided to complete the listing process by December, and given a surge in foreign investors’ concerns about Korean stocks, SK C&C’s road shows are expected to attract much attention from foreign investors.”
In early 2009, the promotion of then SK Telecom CEO Kim Shin-bae to SK C&C vice chairman was construed as a step to push for the smooth listing of SK C&C. Kim, who has earned deep trust from SK Group Chairman Chey Tae-won, took the helm at SK C&C, which plays an essential role in the introduction of a holding company system.
SK C&C suffered a setback in June 2008 by failing in a bid to list itself due to the adverse effects of the global economic crisis. The listing of SK C&C has become the group’s most sensitive issue, but things have now changed as the economy is on the path to recovery, business sources said.
An SK Group official said a majority of the group employees see no problems in preparations for the listing of SK C&C, but they cannot be sure until the last moment.
Currently, SK C&C is the biggest shareholder of SK Holdings, which is virtually a holding company of the SK Group, with a 31.82 interest. SK Group Chairman Chey owns a 44.5 percent stake in SK C&C. The SK Group has a governance format in which Chairman Chey has a controlling stake in SK C&C, which controls SK Holdings.
In July 2007, the SK Group submitted an application to the Fair Trade Commission to change SK Holdings into its holding company, but was not given the green light due to a failure to solve cross-investments among subsidiaries. Under the Fair Trade Act, subsidiaries are not allowed to take a stake in their holding company. SK Telecom and SK Networks, subsidiaries of SK Holdings, now own a 30 percent stake and a 15 percent stake in SK C&C, respectively.
If SK C&C is successfully listed and SK Telecom and SK Networks dispose of their stakes in the former, the SK Group will be realigned into a vertical-type holding company format. nw

SK Group Chairman Chey Tae-won