SK Group scrambles to mitigate effects from Chey divorce verdict

[Graphics by Song Ji-yoon and Chang Iou-chung]

SK Group Chairman Chey Tae-won on Monday apologized for causing concern to employees and stakeholders after a court ordered him to pay 1.38 trillion won ($1 billion) to his ex-wife in a divorce case.

“I apologize for the concern caused by personal affairs to SK members and stakeholders,” Chey said, during a SUPEX Council meeting on Monday.

The SUPEX Council, which consists of the group‘s top leadership, held a meeting to discuss the implications of the ruling, which they believe has affected the group’s value and legacy.

About 20 key executives attended the meeting, including Chairman Chey and Chey Chang-won, who heads the Council.

Chairman Chey expressed his regret over the court‘s decision, stating that the recent court ruling has significantly eroded the value that SK Group has accumulated over 71 years and damaged the honor of its contributors.

Last week, the appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh So-young, director of Art Center Nabi, in a property division.

Acknowledging the role of the late former President Roh Tae-woo, Roh So-young’s father, in the growth of SK Group, the court said that 30 billion won of President Roh‘s funds were transferred to Chey’s father, the late former SK Chairman Chey Jong-hyon, to support his business ventures.

SK Group‘s top executives agreed that the court’s decision had damaged the company‘s growth trajectory.

They disputed the court’s implication of government favoritism in SK‘s entry into the telecom sector, noting that the group had voluntarily relinquished a mobile phone license under government pressure even though it had legitimately secured it.

Some executives expressed dismay at the court’s portrayal of SK‘s growth and decided to provide a robust response.

The court’s valuation of Chairman Chey and Director Roh‘s combined assets at around 4 trillion won resulted in an order for Chey to pay 1.38 trillion won to Roh.

There has been speculation that Chairman Chey may sell shares in SK Inc. and SK siltron Co. to raise funds, potentially exposing the group to aggressive activities by private equity funds as most of his assets are in stocks.

With a 17.73 percent stake in SK and a 29.4 percent stake in SK siltron, Chey may have to liquidate nearly 2 trillion won worth of shares to meet a cash requirement of 1.38 trillion won, considering capital gains taxes of up to 27.5 percent, which has significant financial implications.

A senior official within the group said there is speculation that Chey may have to liquidate most of his assets due to the lawsuit.