[비즈한국] It has been confirmed that Daewoo E&C047040 has filed a lawsuit against Oh Chang-seok, the largest shareholder of Mugunghwa Trust, to claim 13 billion won in put option proceeds. After purchasing a stake in Mugunghwa Trust for 10 billion won in 2023 and securing put option and tag-along rights, the move is interpreted as an attempt to recover its investment due to the company's insolvency and delays in the sale of management rights.
According to Bizhankook's coverage, Daewoo E&C filed a lawsuit against Mugunghwa Trust Chairman Oh Chang-seok in August of last year to demand the payment of put option proceeds. The purpose of the lawsuit is to compel Chairman Oh to buy back the Mugunghwa Trust shares held by Daewoo E&C at a predetermined price. The litigation amount is approximately 13 billion won. A put option is the right to sell a specific asset at a pre-agreed price. It appears that Daewoo E&C turned to litigation after Chairman Oh did not comply with the exercise of the put option.
The dispute between the two sides began with the trading of Mugunghwa Trust shares. In July 2023, Daewoo E&C purchased 78,740 shares (2%) of Mugunghwa Trust from Chairman Oh for 10 billion won. At the time, it was reported that Daewoo E&C was granted a put option to sell the stake back to Chairman Oh, as well as tag-along rights that allow for the joint sale of shares to a third party.
The exercise of the put option by Daewoo E&C is attributed to the insolvency of Mugunghwa Trust. Due to the real estate market downturn and project financing (PF) defaults, Mugunghwa Trust's consolidated net loss widened from 8.3 billion won in 2023 to 150.7 billion won in 2024, and 110.4 billion won in 2025. In the third quarter of 2024, its net capital ratio (NCR) fell to 69%, leading to a management improvement order from financial authorities. Last year, it fell into a state of partial capital impairment where total equity was less than its paid-in capital.
Chairman Oh Chang-seok's failure to meet stock-backed loan obligations also played a role. In June 2023, Chairman Oh took out a 150 billion won loan using his controlling stake (50% + 1 share) in Mugunghwa Trust as collateral. However, an Event of Default (EOD) occurred just five months after the loan was executed. Because the collateral consisted of illiquid unlisted shares, recovering the debt through forced sales was difficult. Ultimately, the insolvency spread to SK Securities001510, which arranged the loan (with its own exposure of 86.9 billion won), and other investors.
On the other hand, a chance for Daewoo E&C to jointly sell its Mugunghwa Trust shares rarely appeared. Although the sale of the controlling stake in Mugunghwa Trust began in earnest around 2024, no buyer has surfaced to date. According to the management improvement plan re-approved by financial authorities in July last year, Mugunghwa Trust was required to finalize a share purchase agreement for the controlling stake by the end of August last year.
Daewoo E&C increased the pressure by freezing assets. In September of last year, one month after filing the lawsuit for the put option payment, it provisionally seized seven plots of land owned by Chairman Oh, including a condo in Jeju Island and farmland in Seongnam, Gyeonggi Province. The claim at the time was 13.5 billion won, which is understood to include the put option payment for the Mugunghwa Trust shares, delay damages, and penalties. It is interpreted that they resorted to seizing Chairman Oh's personal assets as uncertainty regarding the recovery of funds grew.
A Daewoo E&C official stated, "We understand that we have exercised our legitimate rights according to the contract," and added, "It is difficult to comment on a matter that is currently in litigation." We also contacted Mugunghwa Trust and SK Securities to ask about the plans for selling the Mugunghwa Trust stake, but received no response.