Exclusive
'Fourth Time This Year' Hankook Tire Seizes Shares of Former Advisor Cho Hyun-sik Again

[비즈한국] Hankook Tire & Technology161390 (Hankook Tire), the core business entity of the Hankook & Company000240 Group, has recently seized shares held by former advisor Cho Hyun-sik—the older brother who was previously engaged in a management dispute with Chairman Cho Hyun-bum—according to reporting by Bizhankook. The seizure is intended to secure a 5.6 billion won claim for damages resulting from a low-price transaction, though the specific details of the transaction that led to this seizure have not been identified. This marks the fourth time this year that Hankook Tire has frozen assets belonging to the former advisor.

According to Bizhankook’s reporting, Hankook Tire seized the Hankook Tire shares held by former advisor Cho Hyun-sik through Korea Securities Depository on the 5th. The purpose is to secure a damage claim of approximately 5.6 billion won arising from low-price transactions made by the former advisor. On that day, the Seoul Western District Court accepted Hankook Tire's application for the seizure, receiving 1.5 billion won in cash and a surety insurance policy for the deposit, respectively.

The specific details of the low-price transaction cited by Hankook Tire as the background for the seizure have not been confirmed. However, given that the company is acting as a claimant for damages resulting from such a transaction, it is presumed to have occurred during the time former advisor Cho was employed at Hankook & Company Group, when he was in a position to influence the company. Regarding this, an official from Hankook & Company only stated, "We cannot confirm anything regarding that matter."

This is the fourth time this year that Hankook Tire has frozen assets belonging to former advisor Cho Hyun-sik. Previously, in July, Hankook Tire seized former advisor Cho's shares in the company to secure a claim for damages worth approximately 500 million won related to the use of company vehicles. Prior to that, in April and May, the company seized former advisor Cho's residence in Nine One Hannam, Seoul, and his forest land in Yongin, Gyeonggi Province, to secure damage claims of 500 million won and 2.7 billion won, respectively.

Hankook Tire is the core business entity of the Hankook & Company Group, established in September 2012 when the tire business division was spun off from the holding company, Hankook & Company. It currently operates eight tire factories, manufacturing over 100 million tires annually and selling them in more than 160 countries. Last year, the company recorded 8.9396 trillion won in consolidated revenue and 1.3279 trillion won in operating profit. Currently, the largest shareholder of Hankook Tire is the holding company, Hankook & Company, which owns a 30.67% stake.

The largest shareholder of the holding company, Hankook & Company, is Chairman Cho Hyun-bum. Honorary Chairman Cho Yang-rai, the founder of the group, sold all of his shares in Hankook & Company to his second son, Chairman Cho Hyun-bum, through an off-market block deal in June 2022. Through this, Chairman Cho surpassed his older brother, former advisor Cho Hyun-sik (who held an 18.93% stake as of March this year), his older sister Cho Hee-won (10.61%), and the head of the Hankook Tire Sharing Foundation, Cho Hee-kyung (0.81%), to become the largest shareholder (42.03%) of Hankook & Company.

However, a management dispute ensued thereafter. With the exception of Chairman Cho Hyun-bum, the eldest sister Cho Hee-kyung, eldest son Cho Hyun-sik, and second daughter Cho Hee-won filed for an adult guardianship trial for their father, Honorary Chairman Cho Yang-rai, immediately after the Chairman's share purchase. The intention was to verify whether the father’s decision was made voluntarily and with a sound state of mind. However, this petition was ultimately dismissed in the first trial in April 2022, the appellate trial in April this year, and the final appeal to the Supreme Court in July.

The management dispute at Hankook & Company was reignited a year ago by former advisor Cho Hyun-sik’s attempt to launch a tender offer. Private equity firm MBK Partners, along with former advisor Cho Hyun-sik and Cho Hee-won, pushed for a tender offer for Hankook & Company shares last December to secure management control. The plan was to acquire an additional 20.35% to 27.32% stake to secure 50.0% to 57.0% of the issued shares, thereby surpassing the stake held by Chairman Cho Hyun-bum (42.03%). However, the plan fell through as the tender offer failed to meet the minimum purchase requirement (20.35%).

Since the management dispute, former advisor Cho Hyun-sik has been active by establishing a private investment company. After setting up a holding company called MW Holdings in April 2021, he established a venture capital firm named MW&Company in June of the same year. It is reported that he is primarily involved in investing in new technology businesses, as well as providing management and technical guidance. Currently, the CEO of MW Holdings is former advisor Cho, and the CEO of MW&Company is Park Chang-won, a former executive of Hankook Tire known as a close associate of former advisor Cho.