Tongyang Group

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Tongyang Cement & Energy (동양시멘트; KRX : 038500) went into court receivership on 1 October 2013, and the Korea Exchange suspended trading of its shares. [16] In September 2015, Sampyo Group and a Korea Development Bank private equity fund acquired a 55% stake in the company for ₩794 billion, and renamed it Sampyo Cement in April 2017. [17] [18] [19]

Tongyang Networks

Tongyang Networks (동양네트웍스; KRX : 030790) went into court receivership on 1 October 2013. [16] Observers were surprised, as Tongyang Networks was considered one of the group's best-run companies and a "cash cow". Its June 2013 audit report stated that it had cashable assets of ₩57.8 billion. It had a half-year operating loss of ₩2.9 billion, but had nearly its doubled sales revenue from ₩159.9 billion in 2011 to ₩319.2 billion in 2012. [20]

Hanil Synthetic Fiber

Hanil Synthetic Fiber (한일합섬), a textiles company, was founded in 1964, but went into court receivership after the 1997 Asian financial crisis. [21] Tong Yang Major acquired Hanil Synthetic Fiber in 2007. [22] The acquisition resulted in an investigation to determine whether the ₩374.5 billion acquisition had violated laws against leveraged buyouts. [23] Tong Yang Major had created a special purpose vehicle which issued debt to finance the acquisition of Hanil, and then used Hanil's cash reserves to repay much of the debt. However, the trial court disagreed with prosecutors that this was a breach of fiduciary duty by Tong Yang Major directors or that this had resulted in economic harm to Hanil. Both an appellate court and the Supreme Court of South Korea upheld the trial court's ruling. [22]

Hanil was merged into Tong Yang Major in May 2008, which resulted in a violation of South Korea's cross-investment rules on affiliates within the same business group: Tong Yang Magic held a 1.05% stake in Hanil, and failed to divest its holdings within a six-month grace period after a November 2009 warning, due to which Tong Yang Magic was fined ₩173 million by the Fair Trade Commission in March 2010. [24]

Subsidiaries sold in 2013 and 2014

Tongyang Power

Tongyang Power (동양파워) is an electricity generation company. In September 2013, it was owned 55.02% by Tongyang Cement, 19.99% by Tongyang Corp., and 24.99% by Tongyang Leisure. [25] In January 2013, Tongyang Power made what would ultimately be a successful bid to build and operate a two million kilowatt, ₩10 trillion powerplant in Samcheok, Gangwon-do, proposing to use an abandoned mine owned by Tongyang Cement. [25] Even before the bid was officially accepted, on news that Tongyang Power was likely to win, shares in Tongyang Inc. rose to the upper trading halt limit of 15%. [25] [26] During Tongyang Group's late 2013 crisis, the group had initially planned to sell only a minority stake in Tongyang Power, with the aim of raising funds so they could carry through with the construction of the Samcheok plant. [27] However, by late September 2013, group officials expressed their willingness to sell the entire company; one stated, "Survival of the group comes first over everything else. We will give up anything to save the group." [25]

In June 2014, POSCO Energy's board of directors voted to acquire all outstanding shares of Tongyang Power in a ₩431.1 billion deal. [28]

Tongyang Securities

Tongyang Securities (동양증권; KRX : 003470) is a brokerage and financial services company. It was known as Ilguk Securities until 1984, when the Tongyang Group purchased it and renamed it to its present name. Within five years it had become one of the top ten securities companies in the country. [4] Among its subsidiaries is Tong Yang Bank (formerly Orion Bank), a Bangko Sentral ng Pilipinas-licensed retail bank founded in 1997, whose primary market is South Korean expatriates in the Philippines. [29] Tongyang Securities has overseas representative offices in Beijing, Ho Chi Minh City, Hong Kong, New York City, Phnom Penh, and Tokyo. [13]

In the aftermath of Tongyang Group's default in September 2013, Tongyang Securities faced massive fund withdrawals, causing its deposits to decline by 40% over a period of about two months to ₩2.3 trillion. By the end of that period, the pace of withdrawals had slown. [30] By January 2014, roughly 600 employees had chosen to leave the company. [31] The Tongyang Group made efforts to sell Tongyang Securities in order to raise funds and pay back debts, but Tongyang Securities' prospects for a sale were said to be far poorer than sister company Tongyang Power, both due to decreased profitability and because Woori Investment & Securities was also being sold and so competed with it for potential acquirers. [1] Deloitte Anjin supervised Tongyang Securities' sales efforts, but in early January 2014, KB Financial Group withdrew from bidding. [31]

Tongyang Securities also faced accusations of misconduct in selling Tongyang Group company bonds to individual investors, an issue which was drawn to widespread public attention when a female employee committed suicide on 2 October 2013 and left behind a suicide note describing her guilt and regret for her sales recommendations to her customers. [32] An investigation by the Financial Supervisory Service found evidence of fraud by Tongyang Securities, amidst accusations by individual investors that Tongyang Securities had sold them bonds of Tongyang Group companies without properly informing them of the risks. The FSS report found that Hyun had "compelled" Tongyang Securities to sell those bonds, while Tongyang Securities CEO Jung Jin-seok had lied to employees about Tongyang's financial condition in an effort to encourage them to sell more Tongyang bonds. [33] More than 800 affected customers filed a class-action lawsuit against the Tongyang Group and South Korean regulators in January 2014, seeking restitution of their losses. [34]

In July 2014, Yuanta Securities of Taiwan bought out 53.61% of Tongyang Securities from Tongyang International and Leisure. Yuanta appointed Hwang Wei-cherng as a new co-CEO alongside then-current CEO Suh Myung-suk, and indicated that Tongyang Securities would rename itself and begin using the Yuanta brand name. [35]

Subsidiaries sold before 2013

Orion Group

The Orion Group, formerly a subsidiary, was spun off in 2001; its chairman Tam Chul-kon is Tongyang Group chairman Hyun Jae-hyun's brother-in-law. [36] Among Orion's major subsidiaries is Orion (formerly Tongyang Confectionery), a major snacks manufacturer whose products include Choco Pies. [37] The Tongyang Orions, the Tongyang Group's Korean Basketball League team based in Daegu at the time, also came under Orion Group ownership, and officially dropped the "Tongyang" from their name starting from the 2003–04 season. [38]

Tongyang Life Insurance

Tongyang Life Insurance (동양생명보험; KRX : 082640) is a life insurance company with the Tongyang brand name. The Vogo Fund, a private equity fund, reached a deal to increase its stake in Tongyang Life Insurance from 13.5% to 60% in November 2010 for ₩900 billion. [39] In March 2011, when the purchase actually went through, Vogo acquired only an additional 44.05% of the company, with Atinum Partners CEO Lee Min-joo purchasing the remainder of the amount that Vogo had originally agreed to purchase. [40] Afterwards, it was less closely connected to the Tongyang Group than other group members, though it continued to use the Tongyang name, and also held 4.25 million shares in Tongyang Inc. However, in the aftermath of the Tongyang Group's late 2013 crisis, Tongyang Life still saw an outflow of customers, and moved to decrease its remaining ties to the rest of the group. By late October 2013, Tongyang Life stated that it had sold all of its shares in Tongyang Inc.; by that point Tongyang Life had almost no shareholding ties to the rest of the group, with Tongyang Securities owning only a 3% stake in Tongyang Life and group chairman Hyun Jae-hyun owning another 1,283 shares. Tongyang Life was also reportedly seeking to change its name. [14]

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References

  1. 1 2 "Crisis Of Tong Yang Group: Money-strapped Group Belatedly Eager to Sell Key Subsidiaries". Business Korea. 26 September 2013. Retrieved 15 January 2014.
  2. ↑ "Crisis Of Tong Yang Group: Korea's 38th-largest Conglomerate on Brink of Bankruptcy". Business Korea. 31 October 2013. Retrieved 15 January 2014.
  3. ↑ "Tong Yang chief arrested for fraud". The Korea Herald . 14 January 2014. Retrieved 15 January 2014.
  4. 1 2 3 "The agile 'small boat' of finance: Once just a cement maker, Tong Yang today is a one-stop investment shop". JoongAng Ilbo . 13 April 2009. Retrieved 14 January 2014.
  5. ↑ Park, Soon-Won (1999). Colonial Industrialization and Labor in Korea: The Onoda Cement Factory. Harvard University Asia Center. p.  179–180. ISBN   9780674142404.
  6. ↑ Park 1999 , p.  166
  7. ↑ Park 1999 , p.  181 –182
  8. ↑ Park 1999 , p.  184
  9. 1 2 Kim Kyoungwha; Choi Whanwoong (20 October 2013). "Farmer's Dream Fades as Tongyang Defaults: Korea Markets". Bloomberg News. Retrieved 15 January 2014.
  10. ↑ "Embattled Tong Yang Group needs 800 bln won for revival". Yonhap News . 24 September 2013. Retrieved 15 January 2014.
  11. 1 2 "Tong Yang asks for financial help from Orion". Maeil Business Newspaper . 13 September 2013. Retrieved 14 January 2014.
  12. ↑ "Tongyang shielded from creditors: Solvency woes lead to court receivership for three affiliates". JoongAng Ilbo . 1 October 2013. Retrieved 15 January 2014.
  13. 1 2 "Organization Chart". Tongyang Group. Retrieved 15 January 2014.
  14. 1 2 "Tongyang Life seeking to sell all shares in holding firm". Korea Times. 27 October 2013. Retrieved 14 January 2014.
  15. ↑ "Tongyang Inc (001520:Korea SE)". Bloomberg Businessweek. Archived from the original on 26 January 2014. Retrieved 14 January 2014.
  16. 1 2 "Tongyang Cement goes into court receivership". International Cement Review. 3 October 2013. Retrieved 15 January 2014.
  17. ↑ "[Market Insight] Sampyo Gets 4.7% Discount in Tongyang Cement Deal". Korea Economic Daily. 28 August 2015. Retrieved 20 September 2017.
  18. ↑ "Sampyo and KDB PEF $699 million acquisition of Tongyang Cement & Energy". IFLR1000. 28 September 2015. Retrieved 20 September 2017.
  19. ↑ "Tongyang Cement & Energy to change co name to SAMPYO Cement". Reuters. 6 April 2017. Retrieved 20 September 2017.
  20. ↑ "The 'Mystery' of Tongyang Networks Going to Workout Program". Korea Economic Daily . 7 October 2013. Retrieved 15 January 2014.
  21. ↑ Ryu Jin (25 July 2007). "Hanil Synthetic Fiber Seeks Another Takeoff". Korea Times. Retrieved 14 January 2014.
  22. 1 2 "South Korea: Structuring LBOs in Korea: proceed with caution". IFLR. 1 September 2012. Retrieved 14 January 2014.
  23. ↑ "Casino executives grilled in corruption probe". The Korea Herald . 4 April 2010. Retrieved 15 January 2014.
  24. ↑ "Tong Yang Magic fined by FTC". The Korea Herald . 30 March 2010. Retrieved 14 January 2014.
  25. 1 2 3 4 ""We Will Sell Everything Including Thermal Power Plant Assets"...Tongyang Group". The Korea IT Times . 25 September 2013. Retrieved 14 January 2014.
  26. ↑ "Korea Hot Stocks-Tongyang, Korea Line". Reuters. 20 January 2013. Retrieved 14 January 2014.
  27. ↑ "Tongyang Group Considers Sell-off of Tongyang Power Shares". Korea Economic Daily. 17 August 2013. Retrieved 15 January 2014.
  28. ↑ "POSCO Energy acquires Tongyang Power for $431 billion". Yonhap News Agency . 18 June 2014. Retrieved 18 August 2014.
  29. ↑ Kim Yang-tae. "은해소개" [Bank introduction]. Tong Yang Bank. Retrieved 14 January 2014.
  30. ↑ "Bank run at Tongyang Securities cools since crisis: data". Global Post/Yonhap News Agency. 26 December 2013. Retrieved 15 January 2014.
  31. 1 2 "Hurdles To M&A: Rocky Road Ahead for Tongyang Securities". Business Korea. 20 January 2014. Retrieved 22 January 2014.
  32. ↑ Kim Tae-jong (4 October 2013). "Tongyang investors to take fall; Financial regulator launches taskforce to help victims". The Korea Times . Retrieved 14 January 2014.
  33. ↑ Na Jeong-ju (10 December 2013). "'Tongyang deceived customers on bonds'". Korea Times. Retrieved 14 January 2014.
  34. ↑ "Tong Yang victims sue firm, gov't over losses". Yonhap News Agency . 21 January 2014. Retrieved 22 January 2014.
  35. ↑ Song, Su-hyun (14 August 2014). "Tongyang is now called Yuanta: Disgraced securities firm adopts name of new Taiwanese owner". Korea JoongAng Daily . Retrieved 18 August 2014.
  36. ↑ Rogers, Jonathan (28 September 2013). "Tong Yang signals trouble for South Korea". IFR Asia. Retrieved 14 January 2014.
  37. ↑ "'Choco Pie' is a 'Common Noun'". 'Chosun' 'Ilbo'. 5 August 1999. Retrieved 14 January 2014.
  38. ↑ "동양은 '오리온스'로 변경" [Tongyang changes name to 'Orions']. Kyunghyang Shinmun . 17 September 2003. Retrieved 15 January 2014.
  39. ↑ "Tong Yang Group Signs Deal To Sell Tong Yang Life Insurance Co., Ltd.'s 46.5% Stake To Vogo Fund-DJ". Reuters. 14 November 2010. Archived from the original on 5 August 2011. Retrieved 5 August 2011.
  40. ↑ Lim, Stephanie (31 March 2011). "Lee Min Joo and Vogo acquire Tong Yang Life Insurance". Private Equity Korea. Retrieved 15 January 2014.

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Tongyang Group
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