SK Chairman Chey Tae-won to Sell $680 Million of SK Inc. Stock

1.65 million shares to be sold in block trade from Nov. 2

Move seen as securing funds for divorce settlement

SK says it will minimize market impact

Chey Tae-won, chairman of SK Group, will sell $680 million worth of shares in SK Inc., the group's holding company, as he prepares for a possible property division payment in his divorce case with Roh Soh-yeong, director of Art Center Nabi. The move is seen as an effort to secure cash in advance even though time remains before a final Supreme Court ruling.

SK Inc. said on Oct. 2 that Chey, its largest shareholder, plans to sell 1,653,924 shares worth about $680 million through an after-hours block trade starting Nov. 2. Once the sale is completed, Chey's stake in SK Inc. will fall to 15.5% from 17.8%. He will remain the largest shareholder. Including related parties, the combined voting stake will decline to 30.5% from 33.5%.

Chey chose to sell SK Inc. shares directly to secure liquidity for a potential property settlement while minimizing the effect on his control of the group. Using stock-backed loans, as the market had initially expected, would have led to sizable interest costs and the risk of additional collateral requirements if the share price fell. By monetizing part of his SK Inc. stake first, he also retains his 29.4% stake in SK Siltron as another asset that could be turned into cash.

Of the $680 million in shares being sold, $392 million will go to a strategic investor. SK said the investor participated after taking into account SK Inc.'s business competitiveness and medium- to long-term growth potential. It did not disclose the investor's identity. The remaining $288 million will be sold to Korea Investment & Securities through a three-year price return swap, or PRS. Under that structure, gains or losses tied to changes in SK Inc.'s share price are settled between the counterparties. That allows Chey to secure cash immediately while retaining some economic exposure to the shares for three years.

Chey's side filed a further appeal to the Supreme Court on Sept. 14, objecting to a Seoul High Court remand ruling ordering him to pay Roh $680 million in cash. He decided not to contest $504 million of the property division amount and will challenge only the remaining $176 million at the Supreme Court. The planned SK Inc. share sale is effectively equal to the $680 million property division ordered in the remand ruling. That is why the move is being viewed as a preemptive step to secure the liquidity needed before a final Supreme Court decision.

Shin Jeong-eun, Hankyung.com reporter newyearis@hankyung.com