SK Chairman Chey Will Maintain Management of SK Global

SK Global`s creditor groups agreed to let SK Group Chairman Chey Tae-won retain management rights to SK Global.

Chairman Chey`s shares for the Sheraton Walker Hill not directly relates with group management, but will be turned into cash for SK Global`s capital flow.

SK Global`s major creditor bank Hana Bank announced on June 11 that all the shares of SK affiliates given by Chairman Chey other than those of SK C&C and SK Corporation will be turned to cash for SK Global.

The shares will all be sold directly while the unlisted Walker Hill stocks will be sold off to a third party. The total evaluation money coming from the process is expected to reach some 200 billion won.

“Chairman Chey is in control of SK Corporation through SK C&C and, in turn, SK Corporation is in control of the remaining SK affiliates,” said a high official from Hana Bank. “We excluded SK C&C from the cash-making process.”

The creditors decided to hold shares of SK C&C and SK Corporation as co-securities by the end of 2007 according to the related corporate restructuring promotion law. Those shares will be given back to Chairman Chey when SK Global normalizes completely.

If the normalization process goes awry, SK C&C could be sold off, meaning that Chairman Chey`s management rights for SK Global will be maintained on a temporary basis.

Six creditor banks that received individual guarantees from Chairman Chey – Kookmin, Woori, Chohung, Foreign Exchange, Hana and Hanmi – demanded that the creditor group lower SK Global`s total amount to be turned from debt into shares instead of Chairman Chey`s sacrifice of his own shares.

Other banks which did not receive guarantees showed strong opposition to the idea.

SK Corporation announced a board of directors meeting to decide on whether to turn SK Global`s 850 billion won worth of sales bonds into shares. The meeting will be held at SK headquarters in Jongro, Seoul on June 15.

“The date was decided at the director`s meeting held on June 10. That will be the day when we will have a final decision,” an official at SK said.

“Outside directors have yet to decide on the matter,” said an outside official. “We will have to review the necessary materials fully and make a reasonable decision about it.”

Joong-Hyun Park Do-Young Kim sanjuck@donga.com nirvana1@donga.com