IMM PE officials to hold majority of board seats at Hanssem Top officials including CEO I.J. Song to join board as non-standing directors

Translated by Ryu Ho-joung 공개 2021-11-29 08:07:28

이 기사는 2021년 11월 29일 08:05 더벨 유료페이지에 표출된 기사입니다.

IMM Private Equity will take a majority of the board seats at Hanssem as the Seoul-based private equity firm plans to complete the acquisition of a controlling stake in the South Korean home furnishing company by the end of this year.

Hanssem’s board has nominated four senior officials at IMM PE for appointment as non-standing directors, according to a regulatory filing. They include partner and chief investment officer Hae-joon Joseph Lee, partner and chief executive officer I.J. Song, managing director Jay Kim and director Jinwoo Park, with Song expected to chair the refreshed board.

The announcement comes about a month after IMM PE signed an agreement to buy a controlling 27.7% stake in Hanssem for approximately 1.45 trillion won ($1.2 billion) from the company’s chairman Cho Chang-gul and his specially related persons in October.

The appointment is subject to shareholder approval which will be sought at the company's extraordinary general meeting scheduled for next month.

It is notable that each of the four IMM PE officials will serve on the board as a non-standing director, a role that the company’s board has not had before. Hanssem’s board, currently led by chairman Cho, comprises five insider directors, including chief executive Kang Seung-soo, and three outside directors.

Non-standing directors are similar to inside and outside directors in that they exert power over the board and stay informed of the activities of the company, but they are not subject to a tenure limit or certain qualifications and conditions such as a ban on holding concurrent positions. Many South Korean companies use this position to include those representing major shareholders or in favor of the company’s management in their boards.

Hanssem’s new board of directors will comprise seven members. Apart from four non-standing director nominees, the company’s board proposed three outside director nominees, which are former KT Estate chief financial officer Cha Jae-yeon, Seoul Guarantee Insurance’s management consultant Kim Sang-taek, and former Lotte Shopping Supermarket Division chief executive Choi Choon-seok. All three have been recommended by IMM PE.

The board makeover will remove all inside directors from the company’s board. Instead, IMM PE and Hanssem plan to adopt an executive officer system to enhance management efficiency and governance transparency by separating decision-making and supervisory functions from business execution functions. Many companies owned by South Korea’s homegrown private equity firms have introduced this system in recent years.

Meanwhile, IMM PE intends to respond to Teton Capital Partners according to lawful procedures. Teton Capital, which holds the second-largest stake in Hanssem, has recently taken legal action after the company’s board rejected an outside director nominee proposed by the US hedge fund.

“Receiving a control premium in a management rights deal is a rule of M&A, and it is natural for the new owner to have and exercise a right to nominate board directors,” an official at IMM PE said. “We would listen to Teton Capital’s proposals if they are reasonable, but otherwise will respond to them in accordance with lawful procedures.” (Reporting by Ha-na Suh)
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