OK Financial Group lent 45 billion won to Korea Publishing, a subsidiary of Hanyang Institute, with Hanyang Securities equity as collateral. It appears that Hanyang Institute secured short-term funding through a collateral loan as the sale of Hanyang Securities has been halted, making it difficult to raise funds for the time being.
Hanyang Institute, which has faced financial deterioration, attempted to sell its equity in Hanyang Securities to private equity fund operator KCGI, but it was recently stalled by a review from financial authorities.
According to the Financial Supervisory Service, Korea Publishing executed a limit loan of 45 billion won from OK Capital on the 17th. The interest rate is 8.5% per annum.
Baek Nam-gwan, HBDC, and Kim Jong-ryang, chairman of Hanyang Institute, entered into a stock pledge agreement using their combined 22.35% equity in Hanyang Securities as collateral. Baek Nam-gwan holds 10.85% (1,381,149 shares), HBDC holds 7.45% (948,234 shares), and Chairman Kim Jong-ryang holds 4.05% (515,512 shares).
There is no set contract period, but the contract can be terminated if certain conditions agreed upon by the parties are met.
This contract also included a drag-along right on the equity held by Hanyang Institute. If the collateral rights are executed, OK Capital can demand the sale of the 11.29% (1,437,590 shares) of Hanyang Securities held by Hanyang Institute together with the equity held by Baek Nam-gwan, HBDC, and Kim Jong-ryang to a third party.
Previously, KCGI entered into a contract to acquire 29.59% (3,766,973 shares) of Hanyang Securities from Hanyang Institute, Baek Nam-gwan, and HBDC for 220.4 billion won last September. The agreement involves purchasing Hanyang Securities shares at 58,500 won per share. OK Financial Group participated as an investor in the KCGI consortium.
However, the sale of Hanyang Securities by Hanyang Institute is currently on hold. The Financial Services Commission decided on the 16th to suspend its review of KCGI's qualification as a major shareholder in a regular meeting. This comes about three months after KCGI applied for approval of a change in major shareholders on January 22.
It appears that the Seoul Regional Tax Service's initiation of a tax investigation into KCGI has had an impact. The Financial Services Commission reviews the conditions for resuming the suspended review every six months.