The National Pension Service (NPS) said on Wednesday that it will oppose LG Chem’s plan to split-off its battery business.
NPS has a 10.2% stake in the South Korean battery maker and is its second largest share holder.
The board of NPS are currently filled with pro-government officials. NPS’s opposition is being interpreted as the South Korean government voicing its opposition to the plan, which will pressure LG Chem.
LG Chem is expected to put the split-off plan up for a vote in a shareholders’ meeting on Friday.
NPS said while it empathized with the purpose and aim of the split-off plan, it worried that it will damage shareholders’ values.
Small shareholders are currently also opposed to the split-off plan. They said they have purchased shares of LG Chem from the potential of its battery business but they won’t be able to own shares of the newly formed company.
LG Corp owns a 30% stake of LG Chem, while 40% stake are owned by foreign investors. The NPS owns 10%, while South Korean institutional investors and personal shareholders account for 10% together.
For the split-off plan to process, two-thirds of shareholders attending the meeting on Friday will need to vote yes. Over one-thirds of the issues shares but also agree to the plan.
LG Chem said shareholder votes advisory company Institutional Shareholder Services and other was in support of the plan and it was a shame that the NPS is opposing it.
The split-off of the battery business was aimed at growing it to a world’s best energy solution company and increase shareholders’ value, LG Chem said, and the company will actively communicate this goal at the shareholders’ meeting on Friday.