Eximbank President: “There are no plans to sell KAI shares”… KAI representative “Monopoly problem” (Comprehensive 2nd report)

(Seoul = Yonhap News) Reporter Chae Sae-rom and Hong Gyu-bin = President of the Export-Import Bank of Korea Hwang Ki-yeon announced that there are currently no plans to sell shares in Korea Aerospace Industries (KAI), which has recently sparked controversy over privatization due to the expansion of Hanwha Group's shares.

In response to a question from Rep. Yoon Hu-deok of the Democratic Party of Korea asking him to express his position on Korea Eximbank's recent consulting services for the space and aviation industry during the audit of the National Assembly's Finance and Economic Planning Committee on the 20th, President Hwang said, "We did not provide services on the premise of privatization or sale," and added, "There are currently no plans to sell KAI."

President Hwang explained, “The service was proposed through consultation with the Ministry of Finance and Economy after the national briefing session on the development vision of the high-tech industry in the Yeongnam region (last July),” adding, “The Export-Import Bank has client companies related to the space industry, and we tried to hear various opinions on how to play the role of a policy financial institution in the aerospace sector.”

He added, “However, it is difficult to say definitively about future plans (related to the sale).”

In response to Rep. Kang Min-guk of the People's Power Party who pointed out that 'it is unfortunate that as soon as Hanwha increased its stake to 15%, it ordered aerospace-related services that Mercury had never paid for', he said, "I did not know that Hanwha purchased KAI stocks on the market," and "the scope of services did not include the disposal of KAI shares."

When asked, "Have you ever received any communication from political circles, such as the President's Office or the ruling party, regarding the sale of KAI?", he dismissed the question as "no."

Previously, it was pointed out that Korea Eximbank may have been considering selling KAI or restructuring its governance structure by ordering 1.8 billion won worth of consulting to 'strengthen competitiveness of the space and aviation industry' in August.

Hanwha Group increased its stake in KAI to 15.89% in the same month, becoming the second largest shareholder after Mercury (26.41%).

Kim Jong-chul, CEO of KAI, who appeared as a witness on this day, said, "(If Hanwha Group takes over management rights), there is a possibility that there will be a monopoly problem, which will greatly damage the competitive system and shrink the overall aerospace industry ecosystem," and added, "There will be no change in KAI's governance structure without the consent of our members."

He said, "There is no way to prevent the purchase of stocks, but since it is a defense company, I believe there will be government approval or control once it reaches a certain level." He added, "I think it is realistically difficult (for Hanwha to participate in management)."

Regarding the possibility of Hanwha entering the KAI board of directors, he predicted, "The possibility can be seen as open, but realistically, it will be difficult to achieve immediately."

At the National Assembly inspection on this day, it was also pointed out that the Mercury Bank's policy financial support is concentrated on large corporations.

In response to Democratic Party of Korea lawmaker Jeong Tae-ho's point that, "If you look at the support performance of the supply chain stabilization fund as of September this year, 91% of the support in terms of value is for large corporations," President Hwang said, "We will activate the supply chain win-win program to expand support for small and medium-sized companies."

In response to People Power Party lawmaker Kim Sang-hoon's point that we should actively consider supporting Korea Zinc to build a smelter in Tennessee, USA, he said, "We are discussing the use of the supply chain stabilization fund."