Flashlight Capital Demands Enhanced Transparency From KT&G With Court Injunction

Following Open Letter sent to KT&G in April 2023

SINGAPORE–(BUSINESS WIRE)–Flashlight Capital Partners Pte. Ltd (“Flashlight Capital”), a meaningful shareholder of KT&G Corporation (KRX: 033780) (“KT&G” or the “Company”), released an official statement on its court injunctions against the Company filed on October 6, 2023. These injunctions seek the disclosure of information related to: a) KT&G’s export business profitability, b) global distribution contract with Philip Morris International (“PMI”), and c) conspicuous $19 million reported as “Consulting Fee”.

Earlier in April 2023, Flashlight Capital extended an open letter to KT&G urging enhanced transparency in Investor Relations (IR), particularly concerning the Company’s profitability export businesses. Regrettably, the Company’s response in May indicated that such disclosure would be “delayed until more accurate data is available… in order to protect shareholders’ interest.”

“How does concealing information safeguard shareholders?” questioned Sanghyun Lee, Managing Partner of Flashlight Capital. He highlighted the export makes up 55% of the total cigarette business.

Per the Annual Report of KT&G until 2020, the cigarette export Average Selling Price (“ASP”) for key regions were markedly less than the domestic ASP, with NE Asia / SE Asia / Africa reported at less than half the domestic level. Since 2021, the Company has ceased to disclose these figures, leaving shareholders in the dark.

Another area of concern for Flashlight Capital is KT&G’s recent extension of its global distribution contract with PMI from three to fifteen years as of January 2023. Sanghyun noted, “Heat-not-Burn tobacco (“HNB”) symbolizes the future of tobacco and should be a cornerstone of KT&G’s vision.” He underscored the overarching issue, which is not just the reliance on a competitor, but the absence of transparency surrounding the agreement’s terms and potential risks.

KT&G cited confidentiality clauses as the reason behind not disclosing the sales and profit of its HNB export. This stance was put to the test in February 2023 when both KT&G and PMI, when prompted by a local journalist in Korea, failed to confirm or refute whether PMI had indeed prevented KT&G from disclosing Key Performance Indicators (“KPI”s) to its shareholders.

Lastly, Flashlight Capital is demanding clarification on the eyebrow-raising $19 million of “Consulting Fees” in 4Q 2022, a figure initially spotlighted by UBS in February 2023.

“$19 million consulting fees in a single quarter is unheard of,” said Sanghyun Lee. “Intriguingly, this conspicuous sum coincides with our public campaign concerning KT&G since last October.”

About Flashlight Capital

Flashlight Capital Partners Pte. Ltd is an investment management firm founded by the Carlyle Group’s former Head of Korea, Sanghyun Lee. Flashlight Capital is dedicated to strengthening corporate governance and enacting transformative change to its portfolio companies. For more information about Flashlight Capital, please visit


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