POSCO's flag hangs on its building in Seoul in this file photo. Courtesy of POSCO

By Park Jae-hyuk

POSCO is still facing uncertainties about its ambitious plan to restructure itself as a holding company that controls the group's major affiliates and spin off a subsidiary in charge of its steelmaking business.

A group of POSCO's minority shareholders said earlier this week that they will hold a rally on Friday morning in front of the National Pension Service (NPS) in Jeonju, North Jeolla Province, to urge the steelmaker's largest shareholder with a 9.74 percent stake to vote against the spinoff plan.

The minority shareholders have expressed concerns about a possible fall in POSCO's stock price after the planned spinoff. Some of them joined hands with POSCO's unionized workers, who fear a possible deterioration of their labor conditions after the steelmaking subsidiary is spun off from the holding firm.

The state pension fund plans to hold a meeting next Monday to decide its stance on this agenda, which will be put to a vote during an extraordinary general meeting of POSCO shareholders on Jan. 28.

In order to achieve its goal, POSCO needs to win the support of more than two-thirds of the shareholders with voting rights present at the meeting and at least a third of the total outstanding shares.

The company has emphasized that its spinoff will have a limited impact on its stock price, because the steelmaking subsidiary will not go public. It also came up with a plan to retire its treasury stocks and increase dividends to win the hearts of shareholders.

Sustinvest, however, refuted POSCO's claim, recommending its shareholders vote against the spinoff plan. The local proxy adviser has remained negative about a series of spinoffs of Korea's major listed companies.

"Considering the sizes of discounts on stock prices of other spun-off companies, POSCO's shareholder-friendly policies are not effective enough to offset losses that its shareholders will suffer after the spinoff," Sustinvest said in a report.

Although four other local and foreign proxy advisers, including ISS and Glass Lewis, are said to have advised POSCO shareholders to vote for the spinoff, it is still unclear whether the NPS will follow their advice.

The NPS did not follow the global proxy advisers' recommendation last year to vote for the spinoffs of LG Chem and SK Innovation. Back then, the pension fund cited possible damage to shareholder value as the reason for its opposition.