Poongsan's military ammunitions / Captured from Poongsan's website
Poongsan is remaining ambiguous about rumors that it may sell its profitable munitions business so the chairman’s son, who holds U.S. citizenship, can take over management without violating Korean laws that restrict foreign nationals from running defense firms.
Poongsan produces 155-millimeter artillery shells used in the K9 self-propelled howitzer, which has been exported to multiple countries, including Poland and Romania.
According to industry sources and media reports, the copper products and munitions manufacturer emailed employees Thursday to reassure them that no decision had been made.
Poongsan Vice Chairman Park Woo-dong, known as Chairman Ryu Jin’s right-hand man, reportedly told employees in the email that the rumors seemed to have been fueled by heightened attention in the financial market to the company’s possible restructuring plans.
On Wednesday, local news outlets reported that Poongsan had hired U.S. investment bank Lazard, law firm Kim & Chang and accounting firm Samil PwC as advisers for the possible sale of its munitions business to a domestic defense company for about 1.5 trillion won ($1 billion).
Royce Ryu, the chairman’s 32-year-old son, currently serves as an executive at PMX Industries, Poongsan’s U.S. subsidiary that supplies copper and copper alloys.
Under the Defense Acquisition Program Act and the Foreign Investments Promotion Act, foreign nationals seeking to acquire shares in defense firms or hold executive positions in such companies must consult with the defense minister and obtain approval from the industry minister.
In response, Poongsan said in a regulatory filing that “nothing has been decided,” though the company is reviewing structural reforms to enhance corporate and shareholder value. Its parent company, Poongsan Holdings, denied speculation that it planned to sell its stake in Poongsan.
The ambiguous statements have led investors to believe Poongsan may first spin off its munitions unit before selling it.
Source: Korea Times News
