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SK Holdings agonizes over securities unit

SK C&C will likely acquire shares to put brokerage house under chairman’s control


As the deadline for complying with fair trade laws approaches, the IT services provider SK C&C appears likely to acquire SK Securities Co. shares held by other SK Holdings companies.

Under the current Monopoly Regulation and Fair Trade Act, a non-financial holding company is unable to hold stakes in a financial company.
The headquarters of SK Securities in Yeouido, central Seoul
The headquarters of SK Securities in Yeouido, central Seoul

As such SK Holdings and its subsidiaries are required to divest all stakes in SK Securities by the end of the grace period, which runs out on July 2.

Under Korean laws, two year’s grace can be granted to holdings companies to meet shareholding regulations, with a possible two-year extension.

At present SK Securities’ largest shareholder is SK Group’s trading arm SK Networks with 22.71 percent, followed by SKC which holds 7.73 percent.

Although a revised version of the bill allowing such a shareholding structure was submitted to the National Assembly in April 2009, the question of whether it will be passed remains uncertain.

“There are many speculations as to what the group will do, but there has been no change in the group’s stance, which is that we are monitoring the situation while hoping for a positive outcome,” a SK Group official said.

Speculation is that the SK Securities shares held by SK Holdings’ subsidiaries will be sold to the IT services provider SK C&C, which is considered by industry watchers to be the only choice for a new largest shareholder for SK Securities, if the group is to maintain the current shareholding structure.

As SK C&C holds 31.8 percent of SK Holdings, the company is exempt from rules applying to holdings companies. 
Chey Tae-won
Chey Tae-won

In addition, with SK Group chairman Chey Tae-won holding 44.5 percent of SK C&C, the company is regarded by many to be the only choice if SK Group is to maintain its handhold in the finance sector.

More speculation floating about the market is that SK Holdings may dig in and wait until the revised bill is passed, which would result in the Fair Trade Commission issuing orders to sell the offending shares or fines.

“The maximum penalty is 10 percent of the value of the violation, but there are many factors in calculating the fine such as whether a company is in the black, the type and duration of violation, and the degree to which the company cooperated during investigations,” a FTC official said, declining to be named.

“But we are still just monitoring the situation, as there has not been a violation yet and because it remains uncertain whether the revisions will be passed.”

However, the FTC official said that the situation would not be that SK Holdings could maintain the current structure even if the revised bill is approved.

“Even if it is approved, there are factors such as how and when it will be enacted. And, even the revised bill does not allow a subsidiary to hold stakes in a securities firm, making it unavoidable for SK Securities shares to be transferred.”

By Choi He-suk  (cheesuk@heraldcorp.com)
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