The divorce asset division that SK Group Chairman Chey Tae-won, 65, must pay to Roh Soh-yeong, 65, director of Art Center Nabi, was set at 944 billion won in a retrial on remand. The figure is 436.8 billion won less than the 1.3808 trillion won recognized in the previous appellate ruling. It marks the first fact-finding decision to come nine years after Chey filed for divorce mediation in 2017.
According to the legal community on the 25th, the Seoul High Court's Family Division 1 (presiding judge Lee Sang-joo) ruled the previous day at the sentencing date for the asset division retrial on remand between Chey and Roh that "Chey shall pay Roh 944 billion won and the delayed interest thereon."
The biggest issue was whether the SK Inc. shares held by Chey should be included in the asset division as marital community property. The court of first instance judged the SK Inc. shares to be Chey's separate property and excluded them from division. Separate property is inherent property held before marriage and is in principle not subject to asset division.
However, the retrial court, following the appellate court, recognized Roh's contribution by comprehensively considering the marriage period and the timing and process of asset formation, and included the shares in the division. The court stated, "These shares are property acquired under Chey's name during the marriage, and both spouses are recognized as having contributed to their formation and to maintaining and increasing their value."
The reference date for assessing the value of the assets subject to division was set as the date of conclusion of oral arguments in the appellate court before remand. The court cited a Supreme Court precedent that, even when asset division is claimed after a judicial divorce is finalized, the assets subject to division and their value should in principle be determined based on the date of conclusion of oral arguments in the fact-finding trial of the divorce suit.
The court added, "Although the stock price rose sharply, it cannot be said that Chey's managerial contribution had no effect on that rise," and "it is difficult to view that even profits or losses arising from whether the shares are disposed of after the divorce is finalized must all be shared with the former spouse."
With SK Inc.'s stock price recently surging, the question of which point's stock price to use in valuing the assets emerged as another key issue. On April 16, 2024, the date of conclusion of oral arguments in the appellate court before remand, SK Inc.'s stock price was in the 160,000 won range, but by the 26th of last month, the date of conclusion of oral arguments in the retrial on remand, it had risen sharply to the 810,000 won range.
However, the court did not reflect the circumstance of SK Inc.'s stock price rising sharply after the date of conclusion of oral arguments in the appellate court before remand in the asset value, but instead considered it when determining the asset division ratio. The court explained this was a measure to divide the community property more fairly.
The court excluded the 30 billion won in support funds from the side of former President Roh Tae-woo, which had been reflected in the appellate ruling, from the calculation of Roh's contribution. The Supreme Court had judged that even if the funds actually existed, since they constituted illegal funds, they could not be evaluated as a contribution from Roh's side in the asset division process.
Assets already gifted in relation to the formation and maintenance of community property before the breakdown of the marriage were also excluded from division. Accordingly, the court set the asset division ratio at one-third for Roh and two-thirds for Chey. Roh's share was slightly lowered from before remand. The court stated, "A considerable portion of the marital community property is assets formed and acquired during the marriage," and "to fairly distribute the community property achieved through the cooperation of both parties, we took into account that the value of the shares held by Chey rose sharply after the date of conclusion of oral arguments in the appellate court before remand."
The asset division is carried out through cash payment rather than by directly transferring SK Inc. shares. The court ordered cash division, considering that the shares are the foundation of Chey's management rights and control over SK Group.
Chey's attorneys said on the day, "In the process of dissolving a marriage of nearly 20 years, Chey feels apologetic for causing concern to many people last year," and "We will state our specific position after closely reviewing the ruling." Roh's attorneys left the court without answering reporters' questions.
The business community's attention is focused on how Chey will raise the asset division payment amounting to about 1 trillion won. There has been speculation that, depending on the size of the asset division payment, Chey could sell part of his stake in SK Inc., the group's holding company. This is because if Chey disposes of his stake in SK Inc., which sits at the apex of SK Group's governance structure, the group's control could weaken.
However, with this ruling reducing the asset division payment to be paid by about 436.8 billion won from the appellate court's 1.3808 trillion won, the analysis that Chey will raise cash by utilizing other assets and dividends while maintaining his 17.9% stake in SK Inc. as much as possible is gaining weight.
Chey is expected to first mobilize stock-secured loans, real estate, and other cash-equivalent assets to raise funds. His stake in the unlisted company SK Siltron, in which he holds economic interests through total return swap (TRS) transactions, is also being cited as a target for liquidation. This is a plan to separately sell the 29.4% stake held personally by Chey, in addition to the 70.6% stake in SK Siltron that SK Inc. is negotiating to sell with Doosan.
The two sides initially discussed SK Siltron's enterprise value at around 5 trillion won, but as its value rose amid the strong semiconductor industry, they are said to be recently engaged in a war of nerves over a level of 6 trillion to 7 trillion won. However, an SK official said, "The sale of the SK Siltron stake (held personally by Chey) is likely to be a lower priority in raising funds."
There is also speculation that cash could be secured through expanded dividends from major affiliates such as SK Telecom and SK hynix. Hana Securities previously analyzed that "expanded dividends from strong subsidiaries are practically the only way to reduce issues related to SK Group's governance structure." The view is that if subsidiaries with high dividend capacity, including SK Telecom, increase dividends, SK Inc.'s cash flow will improve, and this could help expand Chey's dividend funding sources over the long term.
Meanwhile, foreign media also quickly reported the news, showing great interest. U.S. broadcaster CNN reported the outcome of the couple's divorce suit ruling on the day, saying "the ex-wife of a tech industry mogul failed to secure a larger share of the artificial intelligence (AI) boom in a decade-long 'divorce of the century' lawsuit."
CNN reported that another twist had occurred in the nationally watched lawsuit, saying the ruling that Chey must pay Roh 944 billion won as an asset division payment was less than the amount Roh had demanded.
Reuters also reported the outcome immediately through a breaking news alert as soon as the ruling came out, explaining that "the divorce suit has drawn attention to the stake issue of the billionaire leading South Korea's second-largest conglomerate."
Bloomberg said, "If this ruling is finalized, it will be the most expensive divorce suit in South Korean history," and, citing the Bloomberg Billionaires Index, reported that Chey Tae-won's net worth amounts to about $5.6 billion (8.18 trillion won). It added, "The key issue in this ruling was how to evaluate the value of a spouse who contributed to building one of South Korea's largest companies."
