2022041301

Successor

POSCO

Event Publicly Available Information:

The Reference Entity’s SEC filing in respect of its Spin-off Plan

The Reference Entity’s SEC filing in respect of the notice of completion of its Spin-off Plan

The Eligible Market Participant that submitted the DC Question notes that effective 2 March 2022, POSCO conducted a vertical spin off under the Korea Commercial Code (“KCC”), resulting in the following entities:

  1. POSCO (“New POSCO”) created via the spin-off procedure, composed of all business units, except for those business units relating to functions relating to a holding company; and
  2. POSCO Holdings Inc. (“PH”) which is the same legal entity as the original POSCO and has changed its name.

As extracted from paragraph 2(3) of the company’s SEC filing in respect of the spin-off plan: “Pursuant to Article 530-9, Paragraph 1 of the KCC, the New Company [New POSCO] and the Surviving Company [PH] shall be jointly liable for the Company’s liabilities incurred prior to the Spin-off, which shall include, but not be limited to, any and all liabilities under or arising in connection with all credit agreements, including loan agreements and guaranteed transaction agreements (regarding any payment guarantees, performance guarantees, or any other types of guarantees) executed by the Company prior to the spin-off, regardless of whether the credit related to the liabilities is actually provided before or after the spin-off if such credit is actually provided under the relevant agreement.”

The Credit Derivatives Definitions state that there shall not be a “succession” to the Relevant Obligations of the Reference Entity where the original Reference Entity remains: “a direct obligor or provider of a Relevant Guarantee with respect to such Relevant Obligations” (Section 2.2(d) of the 2014 Credit Derivatives Definitions); or “an obligor (primarily or secondarily) or guarantor with respect to such Relevant Obligations” (Section 2.2(c) of the Updated 2003 Credit Derivatives Definitions (as supplemented by the May 2003 Supplement and the July 2009 Supplement)), as applicable.

The Eligible Market Participant that submitted this question notes that it appears unlikely that New POSCO is a Successor to the original Reference Entity and requests that the AEJ DC make a determination.

DateDescriptionDocument
Closed

DC Decision

AEJ DC Statement - 19 May 2022

The Asia Ex-Japan DC considered the DC Question in respect of POSCO in respect of 2014 Transactions and Updated 2003 Transactions. 

The Asia Ex-Japan DC noted that POSCO underwent a Korean law statutory vertical spin-off process pursuant to the Korean Commercial Code taking effect on 1 March 2022, by which certain of its business units were spun off as a new company named POSCO (New Posco), and the surviving entity was renamed POSCO Holdings Inc. (PH). The Asia Ex-Japan DC noted that although New POSCO appears to have assumed and become liable for certain of the obligations issued by POSCO prior to the spin-off, New POSCO has not succeeded POSCO in relation to them under either the 2014 Definitions or the 2003 Definitions due to the fact that PH remains jointly liable for them.

Accordingly, for the purposes of 2014 Transactions and Updated 2003 Transactions and on the basis of an analysis of Eligible Information, the Asia Ex-Japan DC concluded that there was no Successor to POSCO and POSCO (as renamed to POSCO Holdings Inc.) remains the Reference Entity.

Ongoing

The AEJ DC met today to commence discussions in relation to the DC Question and agreed to meet again in due course.

Ongoing

AEJ DC Statement - 19 April 2022

Pursuant to the email vote held by the AEJ DC Members on 19 April 2022, this DC Issue has been referred to the AEJ DC legal subcommittee, and the first meeting of the AEJ DC to deliberate such DC Questions has been deferred pending deliberation of such DC Questions by the AEJ DC legal subcommittee. 

DC Decision

Request Accepted by DC