HIGHLIGHTS
- The tax code provides for instalment payments.
- The trust arrangement was set to expire on April 25th.
- To secure money, the owner family is likely to sell further shares.
According to a document, Samsung Electronics shares worth $1.1 billion (approximately Rs. 8,400 crore) were sold in a block sale on Thursday, which some experts relate to the Samsung conglomerate's ruling family seeking funds to pay a large tax obligation.
According to a term sheet obtained by Reuters, Kookmin Bank sold 19.9 million Samsung shares for KRW 68,800 (approximately Rs. 4,300) per share, a discount of 2.4 percent from Wednesday's closing price of KRW 70,500 (about Rs. 4,400).
The transaction elicited no response from Samsung Electronics.
However, according to a Samsung Electronics document from October, the shares for sale matched the amount that Hong Ra-hee, mother of Samsung Electronics Vice Chairman Jay Y. Lee and widow of deceased Samsung patriarch Lee Kun-hee, promised to put in trust with Kookmin Bank.
According to the document, the trust agreement time was set to conclude on April 25.
People with firsthand knowledge of the subject earlier told Reuters that since patriarch Lee died in 2020, Samsung's ruling family has opted to pay part of more than $10 billion (approximately Rs. 76,320 crore) in inheritance tax by selling shares in related firms.
The tax statute provides for instalment payments, with one-sixth of the amount due immediately and the balance spread out over five years with an annual interest rate. Analysts estimate that approximately KRW 2 trillion (about Rs. 12,485 crore) will be owed yearly in instalments.
According to Choi Kwan-soon, an analyst at SK Securities, "the owner family is likely to sell further shares to ensure cash for inheritance tax." In early afternoon trade, Samsung Electronics' stock was down 1% at KRW 69,900 (approximately Rs. 4,370), compared to a 0.5 percent drop in the entire market. The transaction was bookrunnered by Goldman Sachs, JPMorgan, and Kookmin.
