US investment fund Terton Capital sent an open letter to the board of Golfzon Holdings on the 22nd, demanding independent review of a tender offer by the largest shareholder and measures to protect minority shareholders. SJ Investment Holdings, a wholly owned subsidiary of One&Partners established by former representative Kim Won-il, announced on the 29th of last month a tender offer to purchase all remaining shares (15.485 million shares) at 6,700 won per share for voluntary delisting purposes, totaling approximately 103.7 billion won. Terton Capital argues the offer price represents only one-third of the book value per share (19,076 won, PBR 0.35x) and fails to reflect the company's core asset values. The fund presented five demands to the board with a response deadline of the 27th, citing fiduciary duties under amended Commercial Act Article 382-3 and the Capital Markets Act Article 138. This case highlights ongoing debates over controlling shareholder transactions and minority shareholder rights in Korean capital markets.
Terton Capital Demands Five Board Actions on Tender Offer
According to the financial investment industry on the 22nd, Terton Capital delivered five requirements to the Golfzon Holdings board regarding the ongoing tender offer. The demands include: (1) the board's expression of opinion on the tender offer in accordance with Capital Markets Act Article 138, (2) formation of a special committee independent from the controlling shareholder, (3) fairness evaluation of the tender offer price by independent experts, (4) disclosure of information on the Golfzon County subsidiary sale process and valuation, and (5) price guarantees for subsequent minority shareholder squeeze-out transactions. The fund set the 27th as the deadline for the board's response.
Fund Cites Real Estate and Subsidiary Stake Undervaluation
Terton Capital pointed out that the proposed tender offer price of 6,700 won per share represents only one-third of the book value per share (BPS) of 19,076 won, equivalent to a PBR of 0.35x, and fails to reflect the value of the company's core assets. According to Golfzon Holdings' business report, the book value of the company's investment real estate is 317 billion won, but the fair value calculated by external valuation agencies reaches 567.5 billion won. The fund explained that considering only the unreflected difference of approximately 250 billion won, about 6,500 won per share in value has been omitted.
The fund also addressed undervaluation of the Golfzon County subsidiary stake. The market values Golfzon County at approximately 2 trillion won; after deducting net debt (approximately 727.8 billion won), the equity value (approximately 1.2722 trillion won) implies that Golfzon Holdings' 31.58% stake has a real value estimated at around 400 billion won. Of this, the portion attributable to minority shareholders (approximately 40%) alone amounts to 160 billion won, significantly exceeding the total tender offer amount of 100 billion won. Terton Capital emphasized that the entire tender offer amount falls short of even the value of the minority shareholder stake in Golfzon County, describing this as a distorted structure.
Tender Offer Funding Structure and Treasury Stock Exclusion Criticized
Terton Capital questioned the funding structure and treasury stock handling. SJ Investment Holdings plans to finance approximately 76% (80.3 billion won) of the tender offer through loans from NH Investment & Securities, using the purchased shares as collateral. The fund analyzed this as an unusual transaction structure that would be difficult to establish unless the value of the acquired assets significantly exceeds the tender offer price.
The fund also pointed out that the company has not canceled approximately 4.2 million treasury shares (9.83% of total issued shares) purchased with 20 billion won since 2023, and these shares were excluded from the tender offer. Terton Capital argued this artificially reduced the circulating volume that the controlling shareholder needed to secure, thereby harming minority shareholder interests.
Ryan Albert, managing member of Terton Capital, stated: "In a situation where discussions continue on legislation to set a lower limit of 80% of net asset value for inheritance and gift tax assessment, the controlling shareholder's claim that 35% of net asset value is a fair price runs counter to policy intent."
Terton Capital Warns of Legal Action if Board Fails to Act
Capital Markets Act Article 138 allows target companies to express support, opposition, or neutrality regarding tender offers through advertisements or correspondence, though this is not legally mandated. Terton Capital criticized the board's passive stance, citing amended Commercial Act Article 382-3, which stipulates directors' fiduciary duty to all shareholders. The fund argued that with one audit committee member classified as a specially related party to the tender offeror, the internal oversight mechanism cannot function properly.
The fund noted that the tender offer was announced just one month after the preliminary bidding deadline for the Golfzon County sale on May 29, urging the board to transparently review information related to the sale and pricing criteria for subsequent minority shareholder squeeze-out transactions.
Terton Capital stated: "If transactions like this are allowed to proceed unchecked, the achievements of corporate governance reform in the Korean capital market could lose the trust of foreign investors." The fund added that the board must make the right decision before the tender offer closes on August 5. Terton Capital further indicated that if its demands are not met, it will exercise appraisal rights and all legal rights based on directors' fiduciary duties under the Commercial Act.
Yonhap Infomax attempted to contact the company multiple times for comment on the shareholder letter but was unable to reach them.
FAQ
What did Terton Capital demand from the Golfzon Holdings board on the 22nd?
Terton Capital sent an open letter demanding five actions: the board's opinion on the tender offer under Capital Markets Act Article 138, formation of an independent special committee, fairness evaluation of the tender offer price by independent experts, disclosure of Golfzon County sale information, and price guarantees for subsequent squeeze-out transactions. The fund set the 27th as the response deadline.
Why does Terton Capital consider the 6,700 won tender offer price unfair?
The fund argues the price represents only one-third of the book value per share (19,076 won, PBR 0.35x) and omits approximately 6,500 won per share in unreflected real estate value differences (250 billion won gap between book value of 317 billion won and fair value of 567.5 billion won). Additionally, the minority stake value in subsidiary Golfzon County alone (160 billion won) exceeds the entire tender offer amount (100 billion won).
