Sovereign Intends to Run SK

The overseas fund Pacific Crest Securities, Inc. has emerged as the biggest shareholder of SK Corporation. The firm has stated that its investment is for long-term purposes and will demand SK, Inc. take dramatic measures to overhaul its management system. In other words, a "foreign" investor, for the first time, has announced its intent to partake in management of a South Korean company. The announcement is drawing the public’s attention as a result.

As of April 10, Crest Securities confirmed that it held 12.39% of the total shares of SK. But, as of yesterday, its cut of shares climbed up to 14.99% of those shares with voting privileges. Thus, experts are constantly raising the possibility that SK, Inc. may be forcefully rendered as a target of an M&A.

The announcement was included in a report issued yesterday by Sovereign Asset Management, parent company of Pacific Crest Securities. In the report, Sovereign stressed that it is a long-term investor, but failed to deny or admit its rumored intentions of acquiring SK.

Sovereign`s report

Sovereign stated, "We believe SK invested in SK Global, and the investment was not profit-bearing in substance, thereby decreasing its value. To overcome the hardships faced by SK, Inc., a series of dramatic measures should be undertaken such that all parties including employees, creditors, the government and shareholders can trust and give their wholehearted support to new management based on that trust."

"We wish to work with the SK management to create more profit, and swiftly and efficiently overhaul its ownership structure," it added indicating its intent to engage in the business operation of SK.

Sovereign defined itself as an investment firm with more than 20 years of experience in the world financial market. It emphasized that its investments on average last for more than four years.

Increased stake for Crest

It was confirmed yesterday that additional acquisition of SK shares increased Crest Securities` portion up to 14.76% of total SK stocks. The Financial Supervisory Service announced yesterday that Crest Securities retained 14.99% of the shares with voting privileges and 14.76% of the total including preferred shares.

Crest Securities purchased almost 2.5 million shares on April 10, and 659,090 on April 11 on the stock market. In total, as of yesterday, Crest Securities retains about 19 million shares. It first started to buy SK shares from March 26, and was able to retain more than 10% as of April 4. Thus, under the law, it had to submit a report within ten days from acquisition of 10% or more of its shares, and so filed an official report yesterday.

The Ministry of Commerce, Industry and Energy (MCIE) announced it would launch an investigation into Crest Securities.

"Crest has spent more money than reported to the authorities in purchasing 12.39%. We will launch a probe into the source of the fund, and examine whether its SK shares exceeded 10% prior to reporting its investment to the authorities as of April 9," Lee Byung-ho, a senior MCIE official, said.