FSS Intervention Brings New Variable to Woori Financial and Tongyang Life Merger Process: "Proceeding with Communication"

Minority Shareholders of Dongyang Life Insurance Dispute Share Exchange Ratio
Financial Supervisory Service Requests Detailed Explanations from Woori and Dongyang
Woori Financial Group: "We Will Faithfully Reflect the Regulator's Request"

The Financial Supervisory Service (FSS) has requested a revised disclosure from Tongyang Life Insurance, containing additional explanations about its stock exchange plan with Woori Financial Group. This has introduced a new variable into the process of making Tongyang Life a wholly owned subsidiary, which the parties aimed to complete within this year. Woori Financial Group and others had planned to hold a shareholders' meeting and board meeting for the stock exchange on July 24, but the FSS's request for revision appears to have put a hold on these plans. It is understood that the supervisory authority requested further explanation regarding investor protection, taking into account minority shareholders' dissatisfaction with the stock exchange ratio between the two companies. Woori Financial Group stated that it would faithfully comply with the supervisory authority's request, but firmly dismissed any intention to change its plans regarding the stock exchange ratio.

Seoul Yeouido Financial Supervisory Service Headquarters. Financial Supervisory Service

According to the financial sector on May 28, the FSS on May 26 requested Woori Financial Group to submit a revised securities registration statement regarding the comprehensive exchange and transfer of shares, and requested Tongyang Life to issue a revised disclosure of key matters. The FSS reportedly asked for more detailed information on the purpose of the stock exchange, the composition and operation of the special committee, and other related matters. In response, a representative from the FSS stated, "We cannot confirm the specific reasons for the request for revision."

In the financial sector, there is an interpretation that the FSS's action is being carried out under the pretext of protecting the rights and interests of minority investors, reflecting their dissatisfaction with the stock exchange ratio between Woori Financial Group and Tongyang Life. Previously, on May 14, Woori Financial Group had disclosed that the comprehensive stock exchange ratio would be set at 0.2521056 shares of Woori Financial Group's common stock per 1 share of Tongyang Life, with the exchange price set at 34,589 won for Woori Financial Group and 8,720 won for Tongyang Life.

As a result, minority shareholders of Tongyang Life have objected, claiming that Tongyang Life's corporate value was not properly reflected in the process of calculating the stock exchange ratio between the two companies. They also raised concerns about the insufficiency of reviews by external evaluation agencies. As of the end of last year, minority shareholders of Tongyang Life held a 19.63% stake (30,633,592 shares), which, based on the closing price at that time (6,580 won), amounts to approximately 201.6 billion won.

According to Article 122 of the Capital Markets Act and Article 130 of its Enforcement Decree, a listed company that has received an order for revision must submit a revised report within three months. The financial sector expects that both Woori Financial Group and Tongyang Life will move as quickly as possible to make the revised disclosure in order to expedite the process of converting Tongyang Life into a subsidiary. If things proceed as originally planned, once the shareholder meeting approval is obtained on July 24 and delisting is completed by August 31, Woori Financial Group will incorporate Tongyang Life as a wholly owned subsidiary and then proceed to merge it with ABL Life Insurance.

Woori Financial Group maintains that it has sufficiently explained the purpose, expected effects, and appropriateness of the stock exchange through its board of directors, the Q1 earnings conference call, domestic and overseas investor relations meetings (NDR), IR conferences, and shareholder meetings. Despite these explanations, the revision order from the FSS has left both Woori Financial Group and Tongyang Life feeling quite unsettled. Some in the financial sector complain that it is unusual for the authorities to request a revision of a securities registration statement related to a simple stock exchange, rather than an initial public offering (IPO) or paid-in capital increase, and that regulatory requirements have become more stringent. A representative from Woori Financial Group commented, "We will faithfully reflect the revision request in the securities registration statement and resubmit it," but declined to elaborate further.

Woori Financial Group plans to proceed with the process of making Tongyang Life a wholly owned subsidiary according to the existing schedule. It has also been confirmed that there are no plans to recalculate the stock exchange ratio as requested by minority shareholders. A Woori Financial Group representative stated, "At present, there are no considerations to adjust the exchange ratio."

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