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| OCI headquarters in Seoul / Courtesy of OCI |
By Park Jae-hyuk
OCI, a Korean polysilicon producer for solar power generation, is grappling with strong opposition to its plan to spin off the company into OCI Holdings, a holding firm for investments, and a new subsidiary named OCI, which will specialize in the chemicals business, according to industry officials, Friday.
Earlier this month, the Institutional Shareholder Services (ISS) recommended OCI shareholders vote against the spinoff plan at the forthcoming general meeting on March 22. The world's leading proxy adviser previously opposed Hyundai Department Store's spinoff as well, leading the National Pension Service (NPS) and other shareholders to thwart the retailer's plan last month.
OCI's plan has already drawn a backlash from a group of the company's minority shareholders in Korea, who have claimed that the spinoff is intended to strengthen the control of Vice Chairman Lee Woo-hyun, the company founder's grandson. The minority shareholders fear that the value of their shares could fall sharply after the planned spinoff.
Considering the fact that Lee and his allies collectively hold around a 23 percent stake in OCI, the management is desperate for support from foreign and minority shareholders for the spinoff plan. The stance of NPS is also critical to OCI because the state pension fund holds over an 8 percent stake in the polysilicon producer.
In response to the ISS' recommendation, OCI claimed that the proxy adviser's report was based on its misunderstanding about the shareholder structure of OCI Holdings and the new subsidiary.
"We finished explaining to ISS and our foreign shareholders," an OCI spokesman said.
OCI, however, has yet to receive an answer from the proxy adviser, according to the spokesman. As of Friday afternoon, ISS did not reply to an email from The Korea Times asking whether it had retracted its report on OCI.
To win support from foreign shareholders, OCI also hired Alliance Advisors in the U.S. as an official proxy advisory firm for its foreign shareholders. The Korean firm also came up with various shareholder return policies to win the hearts of its minority shareholders.
"We seek to pay 30 percent of our free cash flow as dividends," the company said in its report for investors on March 6. "If we make non-recurring profits, we will carry out additional shareholder returns through the acquisition and retirement of our treasury stocks."
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