Shareholder rights dispute for Gwangju Central Park special project, ruling to pay 44.1 billion won penalty to Hanyang

(Gwangju, Jeollanam-do = Yonhap News) Reporter Jeong Hoe-seong = BS Hanyang (hereinafter referred to as Hanyang), which lost the right to construct apartments in a shareholder rights dispute in the private park special project in Gwangju Central Park District 1, will receive a 'penalty' of 40 billion won.

The 14th Civil Division of the Gwangju District Court (Chief Judge Tae-il Park) announced on the 27th that it ruled in favor of some of the plaintiffs in the lawsuit claiming damages filed by Hanyang against Woobin Industrial and others.

The court ruled that Woobin Industries must pay 44.1 billion won to Hanyang.

In January 2020, Hanyang and Woobin Industrial established a special purpose corporation (SPC) to carry out the Gwangju Central Park private special project with companies such as K&G Steel and Park M.

At the time of establishment, SPC's shares consisted of 30% of Hanyang, 25% of Woobin Industrial, 24% of K&G Steel, and 21% of Park M.

Afterwards, the SPC investors were divided into the 'Hanyang faction' (Hanyang, K&G Steel) with a combined stake of 54% and the 'Non-Hanyang faction' (Woobin Industrial, Park M) with a combined stake of 49% over the construction rights for new apartments in the park.

Woobin Industrial, a member of the non-Hanyang faction, forcibly secured a 24% stake in the Hanyang faction's K&G Steel by exercising a call option, and agreed to the agenda of selecting Lotte Engineering & Construction instead of Hanyang as the apartment construction company.

In the process of establishing the SPC, Hanyang lent 4.9 billion won in investment capital to Woobin Industries and entered into a 'special agreement' between shareholders, which stipulated that if the company was unable to exercise its construction rights, it would be compensated 10 times the principal amount.

Hanyang received a final verdict in its favor in the previous lawsuit to recover the principal amount of 4.9 billion won, and also won the trial of this lawsuit seeking the remaining penalty of 44.1 billion won based on the agreement.

However, the court did not accept the request for return of SPC shares filed by Hanyang against Lotte Engineering & Construction.

In the past, when Woobin Industrial defaulted on its debt, Lotte Construction provided a guarantee and exercised its security rights to acquire a 49% stake in Woobin Industrial, including K&G Steel.

Lotte Engineering & Construction won the second trial of the separate lawsuit and had its shareholder rights confirmed, and the lawsuit is pending in the Supreme Court.

Among a series of legal disputes, the Central Park District 1 apartments built by Lotte Engineering & Construction are scheduled to be occupied by about 2,700 households in August 2027.