KT&G faces legal fight as it rejected proposals from activist funds

KT&G headquarters in Seoul [Courtesy of KT&G]

KT&G Corp. has been sued by a group of activist funds in Korea, including Agnes, Pandora Select Partners and Whitebox Multi-Strategy Partners, for refusing to consider their proposals, including the separating its ginseng manufacturing business.

The activist funds filed a preliminary injunction at Daejeon High Court last week to push KT&G to have their proposals included in the agenda for the company’s shareholders meeting next month, according to a regulatory filing Friday.

Lee Sang-hyun, chief executive officer of Agnes, who has been leading shareholder activism against KT&G, is the head of Flashlight Capital Partners (FCP), which is believed to be related to private equity funds in the plaintiff’s camp.

The funds are also demanding the approval of profit distribution, treasury stock retirement and the appointment of new board members to be included in the agenda.

Earlier, FCP demanded that KT&G should split its ginseng operation make it an independent listed company, improve its governance structure and increase shareholder returns. FCP also recommended Cha Suk-yong, former CEO of LG Household & Health Care Ltd., and Hwang Woo-jin, former CEO of Prudential Life Insurance Co., as outside director candidates for KT&G.

However, KT&G rejected the proposals last month, stating that the split-off would have little benefit and it would maintain its existing shareholder return plan.