A court decided SK's Chey owes nearly 1 trillion won in divorce. He must decide how to pay it.

Following the court settlement of what has been dubbed "the divorce of the century," SK Group Chairman Chey Tae-won must now decide how to finance a whopping 944 billion won ($646 million) in cash.

Chey has one month to file an appeal of the ruling that found him responsible for the end of his marriage with Roh Soh-yeong, his now-estranged wife and the daughter of a former president.

Experts wager that the SK chief is likely to use stock-backed loans, share sales, dividend income from corporate subsidiaries and personal cash reserves to cover the property division. The most likely option appears to be a stock-backed loan.

The value of Chey's stake in SK Inc. — totaling about 12.97 million shares — stood at roughly 2.05 trillion won at the time of the appellate court ruling two years ago.

Driven by the recent semiconductor boom, his SK Inc. stake had nearly quadrupled to about 8.17 trillion won based on a closing price of 630,000 won on Friday.

The increase in the value of his holdings has also expanded his borrowing capacity. Still, about 21 percent of Chey's SK Inc. shares are already pledged as collateral for existing loans. That poses a risk because the value of the collateral fluctuates in accordance with the stock price, which means a sharp decline in share prices could trigger margin calls or force early repayment.

While selling shares typically raises concerns about weakening management control, the recent surge in the stock price means that disposing of just a 1 percent stake would generate roughly 460 billion won.

Observers also believe that selling 1 to 2 percent of shares is unlikely to threaten his control of the company, given that Chey and related parties hold about 31.8 percent of SK Inc.’s shares — in case of treasury share cancellation.

"The rise in the stock price means he would only need to sell a small portion of his holdings, so there is unlikely to be any significant change to the group's ownership structure," Oh Il-sun, head of the privately run market research firm Korea CXO Institute, said.

Another option would be to increase dividends from profitable subsidiaries such as telecommunications provider SK Telecom and chipmaker SK hynix.

Last year, Chey's main sources of income were 8.25 billion won in compensation from SK Inc. and SK hynix, along with 103.8 billion won in pretax dividends from SK Inc. Yet the combined income is seemingly far short of the amount needed to cover the court-ordered payment.

If SK Telecom raises its dividend, dividend income given to SK Inc. would increase. SK Inc. had held 30.57 percent of SK Telecom’s shares as of Dec. 31 last year. SK Inc. could then raise its own dividend and boost payouts to Chey as its largest shareholder.

“It is highly likely that SK Telecom, which has strong dividend-paying capacity, would increase shareholder returns and create a structure in which cash distributions from profitable affiliates flow more directly to the group's controlling shareholder,” Hana Securities said after the second-instance ruling in June 2024.

Analysts have also pointed to the possible sale of Chey's 29.4 percent stake in SK Siltron, which is estimated to be worth around 1 trillion won. Doosan Group is currently negotiating to acquire the 70.6 percent stake in SK Siltron held by SK Inc.

Whichever method he resorts to, the timetable for securing the funds is tight.

Taking into account the one- to two-week period required for delivery of the written judgment and the subsequent two-week deadline for filing a final appeal, Chey would have roughly one month to outline a financing plan if he decides not to mount a legal challenge.

Once the ruling becomes final, statutory interest for delayed payment will begin accruing the following day at an annual rate of 5 percent, or about 129 million won per day.

Filing another appeal would mean extending what has already become a yearslong legal battle. Friday’s appellate ruling came nine years after the couple first sought divorce mediation in 2017. It reduced the property division from the 1.38 trillion won awarded in the previous appellate decision in 2024 by about 430 billion won.

BY KIM SU-MIN [[email protected]]