[Edaily Marketin Reporter Hur Jieun ] The inheritance value of the KoreaZinc shares held by the family of the late Professor Choi Jeong-woon, an emeritus professor at Seoul National University who passed away last May and was the uncle of KoreaZinc Chairman Choi Yoon-beom, has been finalized. Based on the average stock price over the four months surrounding the date of death, the final inheritance tax amount is estimated to be in the 210 billion won range.
As the burden of this massive inheritance tax becomes a reality, various funding strategies—including the sale of some shares—are being discussed. Observers note that these developments could serve as a significant variable in the shareholding structure of KoreaZinc ahead of its extraordinary shareholders’ meeting in September.
According to investment banking (IB) industry sources on the 29th, the calculation period for the inheritance tax on Professor Choi’s 1.51% stake (314,468 shares) in KoreaZinc(010130) ended on the 27th. In accordance with the Inheritance and Gift Tax Act, the average closing price for the two-month period before and after the date of death (March 27 to July 27) was 1,340,951 won; based on this figure, the total inheritance value of Professor Choi’s KoreaZinc shares is estimated at 421.7 billion won.
The estimated inheritance tax to be paid by the bereaved family is approximately 210.4 billion won. Since the inheritance value exceeds 3 billion won, the top tax rate of 50% applies; this figure reflects the amount remaining after deducting the progressive tax deduction (460 million won). This is interpreted as a result of the average price settling in the 1.3 million won range, as KoreaZinc’s stock price fluctuated significantly from the 1.7 million won range to the 900,000 won range during the period used to calculate the inheritance tax.
As the inheritance tax burden relative to market value has become excessively heavy, the pressure on the bereaved family to secure the funds to pay the tax is expected to reach its peak. This is because the tax bill amounts to 70% of the value of their shares (approximately 299 billion won), based on KoreaZinc’s closing price the previous day (950,000 won). In addition to the KoreaZinc shares, inheritance procedures are currently underway for the shares in Youngpoong(000670)and YOUNG POONG PRECISION CORPORATION(036560) that the deceased held.
Legal experts predict that the family will take steps to renew or terminate existing stock pledge agreements in order to secure the funds needed to pay the inheritance tax exceeding 200 billion won. There is a precedent from the inheritance process following the passing of the late Honorary Chairman Choi Chang-geol, when financial institutions’ security interests were released and the shares were removed from the list of collateral.
Amid falling stock prices and the heirs’ inheritance tax burden, Chairman Choi’s side established a new limited liability company, P121 Partners, on the 13th, with himself as the sole director. In the investment banking industry, there is speculation that Chairman Choi may have proactively established a vehicle for loan restructuring (refinancing) and collateral reorganization in anticipation of a request to release Professor Choi’s shares as collateral. It is understood that this company is unrelated to the Meritz lending syndicate with which Chairman Choi and the Choi family had previously entered into a stock pledge agreement.
A tax attorney explained, “In the case of KoreaZinc, there is a significant gap between the current stock price and the calculated inheritance tax amount,” adding, “The bereaved family may face pressure to request the release of the pledge from the existing lending syndicate—either to provide tax collateral to the National Tax Service or to raise cash—or to sell a portion of their shares through a block deal or similar means.”
Meanwhile, KoreaZinc will hold an extraordinary general meeting of shareholders on September 9 and face a proxy battle with the MBK-Youngpoong consortium over the appointment of outside directors and separately elected audit committee members. At this extraordinary general meeting, a total of five individuals—four outside directors and one audit committee member—will be elected. In terms of shareholding structure, the MBK-Youngpoong alliance holds approximately 41.1%, while Chairman Choi’s family and their allies hold 37.9%.
