Founder warns kicking his son out of Samyoung Chemical management, shares jump

Shares of Samyoung Chemical Co., South Korean producer of polypropylene (PP) film products, surged on Tuesday upon news that its founder and philanthropist Lee Jong-hwan may push his son and CEO Lee Seok-jun out for mismanagement and replace him with a skilled entrepreneur.

In an exclusive interview with Maeil Business Newspaper on Friday, Lee, 99, accused his son of “excessive” ambition and deceiving the market by hiding poor results of a new project.

The honorary chairman plans to file criminal and civil suits against his son if he does not correct himself and replace him with a professional chief executive by gathering support from institutional investors.

Shares of Samyoung Chemical closed Tuesday up 9.7 percent at 4,070 won.

Samyoung Chemical vowed to take legal action against the honorary chairman, accusing him of defamation to hold onto his control in Samyoung Heavy Industries.

Samyoung Heavy Industries is due to hold a shareholders’ meeting on July 23 to decide whether to retain the aged honorary chairman on board.

Samyoung Chemical is the largest shareholder of Samyoung Heavy Industries – a manufacturer of plants and vessel engine components – with 37.6 percent, and the son, Samyoung Chemical CEO is the second-largest shareholder with 36.25 percent. The CEO’s father Lee and Kwanjeong Educational Foundation owns 22.5 percent and 3.75 percent, respectively.

The honorary chairman has disposed all of other shares except for those of Samyoung Heavy Industries and can indirectly influence management affairs. If the father and son fail to reach an agreement, the two could wage proxy vote contest at Samyoung Heavy Industries. The feud could spill over to parent Samyoung Chemical.

The father has been upset with his son and other managers in their ineptness to build new growth.

Samyoung Chemical failed to develop ultra-extremely thin films for electric vehicles and dropped out of government funding project on environmentally-friendly packaging wraps, costing investors’ confidence in their ability, he said.

Samyoung Chemical – founded in 1959 – made its name as the country’s first petrochemical company by producing synthetic resin CPP films. Under government funding, the company is developing 2.3 micron extra-ultra-thin capacitor films for electric and hydrogen vehicles.

Global chemical companies, along with Samyoung Chemical, can produce 3 micron films. Japan’s Toray Industries is the sole mass producer of 2.3 micron films.

Lee vowed to invest 27 billion won last month to expand capacitor film production facility.

Lee’s father said that 2.3 micron film development was a failure although not yet acknowledged by the management.

Vapor processing is essential to produce capacitor films but major local film vapor companies have already disapproved Samyoung Chemical’s trial products.

Honorary Chairman Lee Jong-hwan and CEO Lee Seok-jun

Samyoung Chemical official, however, said that the company is engaged in a test with a company for its ultra-thin capacitor film for electric vehicles and is showing positive results. The company will be able to supply products to finished car manufacturers after passing the test soon, the official said.

The elder Lee also claims that Samyoung Chemical failed in final procedure to receive government technology development funding for environmentally-friendly packaging wraps in May but the company hid the fact from investors.

Samyoung Chemical clarified that it has already been selected by the government for funding for green packaging PO wrap and is currently engaged in additional research development projects. The government funding project will be complete in December as planned.

The elder Lee donated 97 percent of his wealth to create a scholarship fund and excluded family members in the involvement.

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