SK Group Chairman Chey Tae-won faces the potential sale of up to a billion dollars worth of his shares to pay the property division and alimony payments ordered by the court. This could significantly diminish his control over SK Group due to the high capital gains tax and the resulting reduction in his stake.
Chairman Chey may need to sell shares worth up to approximately 1.9 trillion won ($1.3 billion) to cover the $1 billion in property division and $14.5 million in alimony awarded to Art Center Nabi Director Roh So-young in the second trial ruling. This is due to the capital gains tax in South Korea, which can be as high as 27.5% (including local taxes) when a major shareholder sells shares.
According to industry sources, as of Jun. 2, most of Chairman Chey’s wealth is tied up in SK Group shares. He owns 12,975,472 shares of the holding company SK Inc., representing a 17.73% stake, as well as shares in SK Chemicals (67,971 shares), SK Discovery (21,816 shares), and SK Telecom (303 shares). The total value of his shares in other listed companies, excluding SK, is less than $7.2 million.
Based on the closing price on May 31, the SK stake is valued at approximately $1.6 billion. A simple calculation indicates that selling about 60% of these shares could raise $1 billion. However, the calculation changes when considering taxes.
According to current laws, major shareholders must pay a capital gains tax of 22% (including local taxes) on gains up to $217,872 and 27.5% on gains exceeding $217,872. For example, if $10 billion worth of shares are sold, only about $7.2-7.3 billion would remain after taxes.
Therefore, to net $1 billion after taxes, Chey might need to sell up to $.13 billion worth of shares. This would reduce his stake in SK from 17% to approximately 3%.
That’s why there are concerns that if Chairman Chey Tae-won sells his shares in SK Group to pay the alimony and other payments, his influence over the Group could be significantly reduced.
Chey acquired a 29.4% stake in the unlisted company SK Siltron for $184.2 million. However, his stake is now estimated to be worth about $435 million. If he sells this entire stake, he would owe approximately $69 million in capital gains tax. As a result, Chey’s control over the Group could further diminish due to these taxes.
Given the large principal amount to be paid to Roh, the interest on arrears is also significant. For the bulk of the principal, the property division amount ($1 billion), an annual interest rate of 5% will be applied from the time the Supreme Court or other courts finalize the ruling. Delaying payment by one year would increase the interest by about $50 million.
