Samsung’s Lee family may use stock as collateral for loans for US$10 billion tax: Sources, Companies & Markets News & Top Stories

SEOUL (REUTERS) – The household of deceased Samsung patriarch Lee Kun-hee is discussing utilizing shares in affiliated firms as collateral for private loans to pay a part of more than US$10 billion (S$13.3 billion) in inheritance taxes, three monetary trade sources with information of the matter advised Reuters.

The loans are a strategy to repay a number of the tax invoice with out the household having to promote their intensive Samsung holdings, stated one of many sources, the chief government officer of a monetary firm based mostly in Seoul with information of the discussions.

Two different financial institution officers with information of the matter additionally corroborated the household’s discussions, including that a number of banks had lined up for the enterprise as a result of the Lee household, South Korea’s richest, is taken into account a superb consumer.

The sources declined to be recognized as a result of the mortgage talks are thought of confidential.

“The chances are excessive that they may preserve the present shareholding construction with out promoting main stakes,” stated Kim Soo-hyun, an analyst at Shinhan Funding Corp.

The inheritance tax quantities to about 11 trillion received (S$13.1 billion) for the deceased Lee’s listed shareholdings alone, and the entire taxes for the complete property together with artwork, actual property and money holdings are estimated to be 12 trillion to 13 trillion received.

The Lee household is required to report back to the tax authorities the extent of the inheritance and the fee plan by the tip of April. Mr Lee Kun-hee died on Oct 25 with a web price estimated at about US$20.9 billion.

South Korea’s tax code permits fee in instalments, with one-sixth of the entire tax invoice to be paid first, then the remainder over 5 years at an annual rate of interest at present set at 1.2 per cent. Even in instalments, greater than 2 trillion received is anticipated due yearly.

“The household has been discussing, for a substantial time period, stock-backed loans with a number of banks that primarily take care of Samsung firms,” stated the monetary firm CEO.

“I perceive the complete quantity of the inheritance tax shouldn’t be going to be raised like this, however mentioned together with different strategies.”

Dividends the household receives from their very own shareholdings, along with the deceased Lee’s shares, are additionally anticipated to go towards paying the tax, analysts at Mirae Asset Securities and Shinyoung Securities stated.

On April 16, Samsung Electronics paid out 13.1 trillion received in year-end dividends, its largest single dividend payout ever, in response to firm filings. Of this, the Lee household’s portion was greater than 1 trillion received, together with for Lee Kun-hee’s 4.18 per cent stake in Samsung Electronics, and for son and inheritor Jay Y. Lee’s 0.7 per cent stake.

The youthful Lee is at present serving a 30-month prison term for bribery tied to former President Park Geun-hye.

South Korean enterprise tradition believes there’s advantage in retaining management positions inside the founding households of conglomerates, identified within the nation as chaebol, similar to Samsung.

Due to this, a pro-business foyer group and others have argued for a pardon for Jay Y. Lee so he can resume his position as Samsung vice-chairman.

— to www.straitstimes.com

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