Flashlight Capital Reinforces the Need to Overhaul KT&G’s Governance and Capital Management Following the Company’s Poorly Received Investor Presentation

SINGAPORE–()–Flashlight Capital Partners Pte. Ltd (“Flashlight Capital” or “we”), a meaningful shareholder of KT&G Corporation (KRX: 033780) (“KT&G” or the “Company”), today issued the below statement in response to the investor presentation issued by the Company on January 26, 2023.

As a reminder, Flashlight Capital submitted shareholder proposals to KT&G on January 19, 2023. The proposals include the election of two highly respected Korean business leaders as independent directors to the Company’s Board of Directors (the “Board”) at the Company’s 2023 Annual General Meeting of Shareholders (the “General Meeting”).

Sanghyun Lee, Managing Partner of Flashlight Capital, commented:

KT&G’s investor presentation, which resulted in an immediate share price decline of nearly 5%, fails to address the most pressing concerns for shareholders and only reinforces the need for Flashlight Capital’s proposed solutions. The Company’s aggressive capital expenditure plans, refusal to revise its shareholder return policy before 2024 and hasty dismissal of a potential spin-off of Korea Ginseng Company (‘KGC’) all highlight the lack of responsiveness to shareholders. In addition, the Company’s response suggests a disregard for transparency, poor capital management and deficient governance – all of which we are seeking to rectify at this year’s General Meeting with our shareholder proposals.

KT&G’s Board, which claims to be ‘independent’ from management, has refused to engage with us for months, while blindly supporting leadership’s imprudent and ill-conceived expansion plans without disclosing any targets for profitability, cash flow or return on capital. The Company announced it would leave its shareholder return policy unchanged until 2024, ‘monitoring cash flow and share price levels.’1 ‘Increased’ shareholder returns are not quantified and now become subject to cash flow that will, in our opinion, be jeopardized in the wake of plans to quadruple spending on investments.

Equally concerning, the Company appears to have unanimously dismissed shareholders’ calls to explore a spin-off of KGC. The Company based this decision on questionable assumptions, including the potential for the new company to trade at a valuation of 6x EBITDA (despite global health food peers trading at significantly higher valuations), unquantified dis-synergies from a separation and the risk that (in an unprecedented result) the spin-off would somehow not qualify for tax-free treatment.

KT&G’s Board and management team appear more interested in empire building than running an efficient and competitive business that supports the creation of enduring shareholder and stakeholder value. Despite recent share price appreciation and significant cash accumulation, the stock is trading at the same price it was 15 years ago at a steep discount to its peers. Flashlight Capital is proposing eight steps that can immediately improve governance, capital management and unlock long-term value to reverse the destruction of the ‘lost 15 years’ beginning at this year’s General Meeting. In the coming weeks, we plan to issue a public presentation to provide KT&G stakeholders with a clear sense of our proposals’ rationale and intended impact to improve transparency and oversight at KT&G.”

About Flashlight Capital

Flashlight Capital Partners Pte. Ltd is an investment management firm founded by Carlyle Group’s former Head of Korea, Sanghyun Lee. Based in Singapore, Flashlight Capital’s investment philosophy is grounded in improving corporate governance and unlocking long-term value at its portfolio companies. For more information about Flashlight Capital, please visit

1 KT&G Investor Day Presentation, Slide 24, January 26, 2023 (

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