SK's Chey rebuts court's SK unit value estimate for divorce

SK Group Chairman Chey Tae-won on Monday said the Seoul High Court has innacurately inflated his contribution to the growth of SK C&C, a business arm of the group’s holding company SK Inc., which led to the court's ruling that he needs to pay a record 1.38 trillion won ($1 billion) divorce settlement in cash to his wife.

SK C&C, formerly Daehan Telecom, is the key yardstick for estimating the contribution of his wife Roh So-young, daughter of the late President Roh Tae-woo, since Chey’s father and SK Group founder Chey Jong-hyun died in 1998, 10 years after they married.

The junior Chey secured 17.73% of the holding company SK through SK C&C.

At issue was how much Daehan Telecom was worth before and after he took over the group's management in 1998.

The higher its value rose after 1998, the greater contribution he and his wife are believed to have made to its growth. Thus, he must pay more in compensation for their divorce than he had estimated.

In the original verdict, the appeals court put the value of Daehan Telecom at 8 won per share in 1994 when it was founded; at 100 won in 1998; and at 35,650 won in November 2009 when it went public.

The valuation suggested that Chairman Chey made substantial contributions to the company’s growth, as did his wife.

VALUATION ESTIMATES

On Monday, the Seoul High Court amended its valuation estimate on SK C&C, reflecting Chey’s argument. It lifted the estimated 1998 value of then-Daehan Telecom by tenfold to 1,000 won per share, downplaying his contribution to the company.

The new estimates suggest his wife made much less of a contribution to growing the company’s value than its earlier assessments.

But the court kept its ruling on the divorce settlement intact. Chey will submit his appeal to the Supreme Court this week.

SLUSH FUND

Chey also disputed the high court’s verdict that SK Group’s growth was credited in part to 30 billion won of slush money transferred by his father-in-law, then-President Roh, as well as his government’s support. Roh served as South Korean President from 1988 to 1993.

In 1994, SK Group acquired the then country’s No. 2 mobile carrier, currently SK Telecom Co., from the government, which smoothed the textile-to-chemical group’s foray into the mobile telecom service market. Chey controls 30.57% of SK Telecom.

PREPARED AGAINST HOSTILE TAKEOVER BIDS  

Before the group’s news conference on Monday, Chey said South Korea’s second-largest business group has the capacity and is ready to defend against takeover attempts, addressing concerns that his divorce battle leaves the group vulnerable to hostile takeover threats.

The appellant court’s verdict spawned speculations that Chey may have to sell a substantial amount of his shares in SK Group units, particularly those in SK Inc., to raise the money ordered to pay to his estranged wife.

“We need to prevent hostile takeovers from taking place, but even if it happens, we have the capacity to protect against it. You don’t have to worry,” he told reporters, asked about the risk of being exposed to unfriendly takeover bids in the aftermath of his divorce.

Lee Hyung-hee, head of the social value commitment under SK’s top decision-making body Supex Council, added that the group has strategies in place to protect against hostile takeover bids.

Chairman Chey filed a divorce suit against Roh in February 2018, three years after he confessed to fathering a daughter with another woman. In 2019, Roh filed a countersuit, demanding property division.

The ongoing disputes came as SK Group has embarked on a reshuffling process to focus on core units such as semiconductors and batteries.

Write to Hyung-Kyu Kim at khk@hankyung.com

Yeonhee Kim edited this article.