SEOUL – The controlling family of Samsung Group is set to dispose of a massive block of Samsung Electronics shares, valued at approximately $1.3 billion, to fund the payment of inheritance taxes and repay stock-backed loans.
Samsung Electronics announced on the 17th that Hong Ra-hee, former director of the Leeum Museum of Art, Lee Boo-jin, CEO of Hotel Shilla, and Lee Seo-hyun, president of Samsung C&T, signed a trust agreement with Shinhan Bank on October 16 to sell a total of 17,716,000 shares (0.3% stake) of Samsung Electronics. Based on the closing price of 97,900 won on the signing date, the transaction size amounts to about 1.7344 trillion won, equivalent to approximately $1.26 billion USD (assuming a rate of 1370 KRW/USD). The contract period extends until April 30 of next year, during which time Shinhan Bank will execute the share sales.
The shares to be sold consist of 10 million shares from Hong Ra-hee, 6 million shares from Lee Boo-jin, and 1.716 million shares from Lee Seo-hyun. The family stated the purpose of the trust agreement is "for tax (inheritance tax) payment and loan repayment."
The four members of the Samsung owner family, including Samsung Electronics Chairman Lee Jae-yong, have been utilizing a five-year, six-installment payment plan for the total inheritance tax of 12 trillion won (approximately $8.76 billion) following the death of their patriarch, Lee Kun-hee. The final installment is due in April next year. Hong Ra-hee, Lee Boo-jin, and Lee Seo-hyun have previously raised funds for the tax through sales of their stakes in Samsung Electronics, Samsung C&T, and Samsung SDS, as well as through obtaining stock-backed loans. Chairman Lee Jae-yong has reportedly covered his portion primarily through personal loans and dividend income, without selling his shares.
Upon completion of this substantial share disposal, Hong Ra-hee’s stake in Samsung Electronics will be reduced to 1.49% (87,978,700 shares), Lee Boo-jin’s to 0.71% (41,745,681 shares), and Lee Seo-hyun’s to 0.77% (45,574,190 shares). Market observers cautiously anticipate that the impact of this large-scale sale on Samsung Electronics' stock price will be limited, given its specific purpose of funding inheritance tax payments.
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