Samsung C&T asked to address '68%' share price discount by U.S. hedge fund

U.S.-based activist fund Whitebox Advisors called on Samsung C&T to address share price discounts by implementing a transparent capital allocation framework and adjusting executive compensation plans.

Samsung C&T is pressured by Whitebox Advisors to address share price discount [NEWS1]

U.S.-based activist fund Whitebox Advisors called on Samsung C&T to address share price discounts by implementing a transparent capital allocation framework and adjusting executive compensation plans.

Whitebox Advisors, which reportedly owns some $100 million stake in Samsung C&T, sent a letter to the company in November urging it to address the share price, which the fund believes is 68 percent lower compared to the company's net asset value.

"We are writing to share our recommendations for addressing the company's 68% trading discount to the value of its underlying assets, which is depriving minority shareholders the benefit of Samsung C&T's high-quality businesses," the letter said.

The fund sent the letter after a private meeting at its Seoul office with Samsung C&T's external board member Yi Sang-seung and Bae Young-min, who is in charge of the company's investor relations.

The activist fund requested the company increase shareholder returns by reallocating cash and adopting a more transparent capital allocation framework.

It also requested the company to adopt an executive compensation structure that aligns with the minority shareholders.

"We believe that Samsung C&T's opaque executive compensation model should be adjusted to align executive incentives with shareholders' interests," it said in the letter, adding, "There are no details regarding the criteria that determine the level of executive compensation."

Whitebox Advisors says it has been investing in Samsung C&T since 2017 and is holding onto 0.5 percent of its outstanding common shares.

The fund's action comes after at least two other funds publicly pressured Samsung C&T to improve its management structure.

Earlier this month, British activist fund Palliser Capital said there is a $25 billion disparity between the share price and the company's "intrinsic market value," which translates to a 63 percent discount.

Another British fund, City of London Investment Management, also asked Samsung C&T to increase the dividend.

Samsung C&T's share price, which has gained approximately 25 percent since the end of October, is being traded at 131,900 won ($101.88) per share as of 11 a.m. Thursday, up by 2.49 percent compared to the previous trading day as of press time.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]