SK Inc. to retire $3.5 billion in treasury shares

SK Inc. will retire treasury shares worth 5.16 trillion won, or $3.51 billion, representing all its holdings except those reserved for employee compensation, the company said in a regulatory filing on Tuesday.

The SK Seorin building in Jongno District, central Seoul, on Aug. 25, 2020. [NEWS1]

SK Inc. will retire treasury shares worth 5.16 trillion won ($3.51 billion), representing all its holdings except those reserved for employee compensation, the company said in a regulatory filing on Tuesday.

The holding company’s board approved the retirement of about 14.69 million shares out of the total 17.98 million treasury shares held by the company.

The 5.16 trillion won is based on Tuesday’s closing price. Based on the previous day’s closing price before the board meeting, the value stood at 4.83 trillion won.

The shares to be retired include not only treasury shares repurchased by the company to enhance shareholder value but also shares acquired for specific purposes during the company’s corporate governance restructuring.

SK Inc. merged with SK C&C, now SK AX, in 2015 as part of efforts to simplify its governance structure and improve transparency.

The company determined that retiring all treasury shares would be the best option to maximize shareholder value and enhance corporate value, according to an SK Inc. representative.

"With the revision of the Commercial Act allowing treasury shares acquired for specific purposes to be retired through a board resolution, we actively reflected the legislative intent of enhancing shareholder value,” the source said.

The decision was also supported by improved financial health following portfolio rebalancing carried out over the past two years.

SK Inc.’s net borrowings on a standalone basis fell to 8.4 trillion won as of the third quarter of last year, down from 10.5 trillion won at the end of 2024. Over the same period, its debt-to-equity ratio improved from 86.3 percent to 77.4 percent.

In the past, SK Group used treasury shares to bolster the relatively low 17.9 percent stake of Chairman Chey Tae-won, the conglomerate’s largest shareholder, in order to defend management control.

During a 2003 management dispute with sovereign wealth fund Sovereign Asset Management, SK responded by buying treasury shares and selling them to friendly investors.

Industry observers have pointed out that if discussions on the mandatory retirement of treasury shares under revisions to the Commercial Act continue, it could affect corporate governance structures.

The board’s decision to retire treasury shares worth some 5 trillion won reflects a “firm commitment to transparent and shareholder-friendly management,” an SK Inc. source said.

“It is a decisive step aimed at setting a model precedent in the domestic capital market while continuing transparent and shareholder-oriented management,” the source said. “We will further strengthen shareholder trust and consistently prioritize shareholders to enhance corporate value.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY KIM KYUNG-MI [shin.minhee@joongang.co.kr]