(Korean Air)
The heiress of South Korean airline-focused conglomerate Hanjin Group, widely known for the "nut rage" incident in 2014, has joined hands with a local fund and a builder for the group's management control ahead of a shareholders meeting in March.
In a joint statement with local activist fund Korea Corporate Governance Improvement (KCGI) and midsized builder Bando Engineering & Construction, Cho Hyun-ah, the eldest daughter of late Hanjin Group and Korean Air Lines Co. Chairman Cho Yang-ho, said the group is "at risk" and badly needs to invite a professional manager to improve its way of management, financial status and shareholder value.
"In the upcoming shareholders meeting, the three parties have agreed to cooperate for Hanjin Group by jointly exercising voting rights and making some suggestions as shareholders," Cho said in the statement.
The 45-year-old heiress had meetings with KCGI and Bando this month after lashing out at her younger brother Cho Won-tae, chairman of the airline-to-logistics conglomerate and the national flag carrier, for not heeding their father's wishes in the way of managing the group.
She claimed that her 44-year-old brother was appointed to the top post without sufficient discussions among family members after their father's death in April and has been making management decisions without prior consultations.
Her brother seeks to be reelected as head of Hanjin Group and Korean Air in March.
For reappointment, Won-tae is required to take concrete action to improve the group's governance structure and roll out business plans ahead of the planned shareholders' meeting, analysts said.
They said the chairman has yet to present any detailed action plans to enhance the group's corporate value as he has been engaged in the family feud and issues involving inheritance from his late father.
In November, Hanjin KAL's board of directors took initial steps by setting up a special committee and a compensation committee under its wing as part of its broader efforts to improve its governance structure.
Hanjin said the committee will conduct a feasibility study on management issues directly related to shareholder value before a decision is made and review the legality of transactions between affiliates.
Hanjin's family scandal began in 2014 when the infamous nut rage incident made global headlines.
Back then, Hyun-ah forced a Korean Air flight back to the boarding gate at a New York airport because she lost her temper over the way she was served nuts in first class -- in an unopened bag instead of on a plate.
In March 2018, Hyun-ah, the former vice president of the group's flagship Korean Air, came back as head of KAL Hotel Network, the hotel affiliate of Hanjin Group.
But she was dismissed from the post a month later, along with Cho Hyun-min, 37, who was accused of throwing water in the face of an ad agency manager during a meeting in March 2018.
In June last year, Hyun-min returned as senior vice president and chief marketing officer of the holding company as she was cleared of any charges.
The Cho family and other relatives together hold a 28.93 percent stake in Hanjin KAL, the holding company of Hanjin Group. Hyun-ah owns a 6.49 percent stake and Won-tae holds a 6.52 percent stake, with their younger sister Cho Hyun-min and mother Lee Myung-hee controlling 6.47 percent and 5.31 percent, respectively.
KCGI is the biggest shareholder with a stake of 17.29 percent in Hanjin KAL, followed by Delta Air Lines Inc. with 10 percent, Bando with 8.28 percent and the National Pension Service (NPS), South Korea's state pension fund, with 4.11 percent.
In November, KCGI asked for a meeting with Delta Air Chief Executive Ed Bastian to join forces to monitor Hanjin's efforts to enhance its governance structure.
Earlier, KCGI also demanded that a Seoul court designate an auditor to review the process by which Hanjin KAL's board appointed the late chairman's only son Won-tae as new chairman of the group in April.
In the statement released through their leading legal counsel Bae, Kim & Lee LLC, also known as Taepyeongyang law firm here, Cho said she and Bando have fully agreed on KCGI's suggestions, including inviting a professional manager to head the group.
The three parties also said they "won't directly participate in management decisions and instead will have the professional manager make the group a better business entity."
Meanwhile, Delta, which has been regarded as a "friendly" shareholder, said its stake investment in Hanjin KAL is aimed at strengthening business ties, not at affecting management rights.
In 2018, Delta and Korean Air formed a joint venture to collaborate on the industry's most robust trans-Pacific routes, providing customers with access to more than 290 U.S. destinations and over 80 in Asia.
Korean Air said it has no official stance on the joint statement.
(Yonhap)
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