Sovereign Asset Management said Wednesday it would appeal a South Korean court?s ruling that it could not force SK Corp, the world?s second largest oil refiner, into holding an extraordinary general meeting.
Monaco-based Sovereign, SK Corp?s single largest shareholder with a 14.9 per cent stake, has challenged the position of Chey Tae-won, the SK Corp chairman convicted for his role in a $1.2bn accounting fraud at SK Networks, an affiliate.
After losing an attempt to have Mr Chey barred at the March annual meeting, Sovereign tried to call an extraordinary meeting but that was rejected by SK Corp. The Seoul Central District Court last week rejected Sovereign?s request for legal backing to call the meeting.
But Sovereign said Wednesday the court confirmed it had met the legal requirements to call an EGM and it had ruled that Sovereign was not abusing its rights as a shareholder. However, the fund manager was astounded that the court said the shareholder rights of a corporate entity might be less enforceable than those of a ?natural person?.
?Sovereign is seeking to overturn what it believes to be a potentially damaging ruling for Korea?s capital markets if it is left to stand,? said James Fitter, Sovereign?s chief executive. ?It is vital for the efficient functioning of Korea?s capital markets that each shareholder should be able to freely exercise the basic shareholder rights to which it is entitled under Korean law.?
SK Corp said Sovereign?s appeal was ?unfortunate?.
?We deem this as another attempt by Sovereign to divert attention away from the success of SK Corp?s execution of management?s strategies and its creation of value for all shareholders,? said Lee Seung-hoon, head of investor relations.
Meanwhille, Moody?s Investors Service on Wednesday raised the outlook on SK Corp?s long term ratings from stable to positive, reflecting the continued strengthening in its operations, progress made on reducing financial leverage and signs of ongoing improvement in corporate governance.
The rating can be further upgraded if the company continues to improve corporate governance, no longer provide financial support to subsidiaries or affiliates, and no further problems emerge at its subsidiaries. In the longer term, Moody?s said SK Corp needed to also deleverage and improve its debt maturity profile and refinancing risk if it was to return to investment grade.