Hahn & Company, a South Korean private equity investment firm and the largest shareholder of Namyang Dairy Products, is intensifying pressure on Chairman Hong Won-sik to relinquish control.

Industry sources revealed on Thursday that Hahn & Co. has recently demanded the appointment of Hahn & Co. Chairman Yeo-Eul Yoon and two vice-chairmen as internal directors of the major milk product manufacturer. This request will be presented as an agenda item at the regular shareholders’ meeting scheduled for March 29. Namyang Dairy Products, in response, publicly stated its intent to comply with this demand through a public disclosure on March 6.

However, Chairman Hong has previously ignored similar requests from Hahn & Co. After the signing of a share purchase agreement with Hahn & Co. in 2021, a similar agenda was raised at an extraordinary shareholders’ meeting, but Hong chose not to present it.

Due to concerns that Hong may repeat such behavior, Hahn & Co. applied for an injunction in the Seoul Central District Court last month. The injunction compels Hong and the company’s management to exercise voting rights in line with Hahn & Co.’s demands. Failure to comply could result in a penalty of 50 billion won ($37.7 million)

Hahn & Co. has also preemptively requested a court order to convene an extraordinary shareholders’ meeting after the regular meeting, in case it is not able to assume control during the regular meeting. Even if Hong ignores requests from Hahn & Co. during the regular meeting, Hahn & Co. can proceed with an extraordinary meeting following a court order to replace the management.

In addition to these legal maneuvers, Hahn & Co. continues a separate lawsuit for damages against Chairman Hong and his family. Hahn & Co. has already received 310 billion won from Hong as a result of a Supreme Court ruling in favor of its claims related to a previous share transfer agreement between the two parties.

By Jeon Hyeong-min and Minu Kim

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