Hanjin KAL buying back 20 billion won of its shares

Hanjin KAL will be buying back 20 billion won ($14.3 million) of shares over the next six months.

An employee enters Hanjin KAL headquarters in Jung District, central Seoul. [NEWS1]

Hanjin KAL will be buying back 20 billion won ($14.3 million) of shares over the next six months.

The board of directors met Wednesday and approved the buyback, saying the share price is too low compared to its actual corporate value.

"We decided to buy back shares because our potential for future growth isn't adequately reflected in our share price," said a spokesperson for Hanjin KAL. "We have enough capital because of the cash we have from the sale of Jin Air stocks in June, and we will do our best to make the company grow and enhance shareholder value."

The company says the buy back will reduce the number of total company shares, which it hopes to boost share prices.

The buy back will be finalized by March 22 next year.

Following the announcement, Hanjin KAL shares rose 3.69 percent to 42,200 won on Wednesday.

The company's shares have been performing poorly, down 30 percent since Aug. 22.

Hanjin KAL has been the subject of an ongoing battle for control between a group led by Chairman Cho Won-tae and a group led by Cho Hyun-ah, his sister.

Cho Won-tae owns 5.78 percent of Hanjin KAL, and related shareholders control 18.73 percent of the stock. Combined with shares of Korea Development Bank, Delta Airlines, LX Pantos and Naver, which tend to vote in favor of the chairman during board meetings, he controls 47.25 percent of the company.

Cho Hyun-ah owns 2.06 percent of the company. Hoban Construction, which owns 16.44 percent, has worked with her to oust chairman Cho Won-tae in the past but said in March that it is a passive investor and has no interest in seeking to influence with its votes.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]