SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2017
Commission File Number: 000-53445
KB Financial Group Inc.
(Translation of registrant’s name into English)
84, Namdaemoon-ro, Jung-gu, Seoul, 04534, Korea
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Report of Material Event
On April 14, 2017, the board of directors of KB Financial Group Inc. (“KB Financial Group”) resolved to effect a comprehensive stock swap (the “Stock Swap”) pursuant to which the common shares of KB Capital Co., Ltd. (“KB Capital”) would be exchanged for common shares of KB Financial Group, and entered into a stock swap agreement (the “Stock Swap Agreement”) with KB Capital in connection therewith. The details of the Stock Swap are as follows:
| 1. | Form of the Stock Swap |
“Small-scale stock swap” pursuant to Article 360-10 of the Korean Commercial Code (the “KCC”)
| 2. | Stock Swap Target Corporation |
| a. | Company name: KB Capital Co., Ltd. |
| b. | Representative director: Ji-Woo Park |
| c. | Main business: Financial leasing |
| d. | Relationship with KB Financial Group: Consolidated subsidiary |
| e. | Total number of shares issued: 21,492,128 common shares |
| f. | Key financial data for the most recent fiscal year: |
| • | Total assets: KRW 7,452,822,711,536 |
| • | Total liabilities: KRW 6,646,222,099,944 |
| • | Total equity: KRW 806,600,611,592 |
| • | Share capital: KRW 107,460,640,000 |
| 3. | Swap Ratio |
KB Financial Group: KB Capital = 1:0.5201639
| 4. | Method of Calculating Swap Ratio |
As KB Financial Group and KB Capital are both “stock-listed corporations,” the swap ratio for the Stock Swap was determined based on a swap price calculated in accordance with Article 165-4 of the Financial Investment Services and Capital Markets Act (the “FSCMA”) and paragraph (1) of Article 176-5 and paragraph (2) of Article 176-6 of the Enforcement Decree of the FSCMA.
With the date preceding the earlier of the date of the resolution of the board of directors for the Stock Swap (April 14, 2017) and the date of the Stock Swap Agreement (April 14, 2017) as the calculation date (April 13, 2017), the swap price was calculated as the average of (x) the volume weighted average of the closing prices of the applicable common shares for the latest one-month period, (y) the volume weighted average of the closing prices of the applicable common shares for the latest one-week period and (z) the closing price of the applicable common shares as of the latest date.
In addition, paragraph (2) of Article 176-6 and paragraph (1)-1 of Article 176-5 of the Enforcement Decree of the FSCMA allow for the application of a discount or premium of up to 30% (10% in case of mergers between affiliates) of the swap price calculated in accordance with the above method. However, based on the internal review by each of KB Financial Group and KB Capital and mutual discussion and negotiation between KB Financial Group and KB Capital, no such discount or premium was applied in calculating the swap price for the Stock Swap.
| a. | Entity that will become the complete parent company (KB Financial Group) |
| Item |
Amount (KRW) | Calculation Period | ||
| Volume weighted average of the closing prices of KB Financial Group common shares for the latest one-month period | 49,710 | March 14, 2017 ~ April 13, 2017 | ||
| Volume weighted average of the closing prices of KB Financial Group common shares for the latest one-week period | 47,769 | April 7, 2017 ~ April 13, 2017 | ||
| Closing price of KB Financial Group common shares as of the latest date | 48,550 | April 13, 2017 | ||
| Average | 48,676 | — | ||
| Swap price |
48,676 | — | ||
| b. | Entity that will become the wholly-owned subsidiary (KB Capital) |
| Item |
Amount (KRW) | Calculation Period | ||
| Volume weighted average of the closing prices of KB Capital common shares for the latest one-month period | 25,159 | March 14, 2017 ~ April 13, 2017 | ||
| Volume weighted average of the closing prices of KB Capital common shares for the latest one-week period | 25,100 | April 7, 2017 ~ April 13, 2017 | ||
| Closing price of KB Capital common shares as of the latest date | 25,700 | April 13, 2017 | ||
| Average |
25,320 | — | ||
| Swap price |
25,320 | — | ||
| 5. | External Appraisal |
| a. | External appraisal: Not required |
| b. | Basis: The Stock Swap is a stock swap between stock-listed corporations and the swap ratio for the Stock Swap was determined based on a swap price calculated in accordance with Article 165-4 of the FSCMA and Articles 176-5 and 176-6 of the Enforcement Decree of the FSCMA. Accordingly, an assessment of the appropriateness of the swap price by an external appraiser is not required under paragraph (3) of Article 176-6 of the Enforcement Decree of the FSCMA. |
| 6. | Purpose of the Stock Swap |
Through the addition of KB Capital as a wholly-owned subsidiary, KB Financial Group seeks to achieve synergies by increasing management efficiency and strengthening the unity of KB Financial Group, thereby enhancing its corporate value.
| 7. | Main Impact and Effects of the Stock Swap |
| a. | Main impact and effects on the management of KB Financial Group |
The Stock Swap may have a dilutive effect on the share ownership percentages of the existing shareholders of KB Financial Group depending on the results of the tender offer approved by KB Financial Group’s board of directors on April 14, 2017 (the “Tender Offer”). However, there will be no change in control for corporate governance purposes, and KB Financial Group and KB Capital will continue to exist as separate entities.
In addition, pursuant to the Stock Swap Agreement, the terms of office of the directors and audit committee members of KB Financial Group who were appointed prior to the Stock Swap will remain the same following the Stock Swap notwithstanding Article 360-13 of the KCC. No new directors will be appointed as a result of the Stock Swap.
| b. | Main financial impact and effects on KB Financial Group |
KB Financial Group expects that the Stock Swap will result in the improvement of certain of its group-level performance metrics (including its return on equity, double leverage ratio and debt ratio) and an increase in its capital through the issuance of new shares and the allotment of treasury shares.
Although the assets and liabilities of KB Capital will remain unchanged and only its shareholder composition will change, KB Capital expects that the Stock Swap will lead to a reduction of its funding costs, due to an improvement in its creditworthiness that may result from its becoming a wholly-owned subsidiary of KB Financial Group.
| c. | Main impact and effects on the business of KB Financial Group |
By converting KB Capital to a wholly-owned subsidiary through the Stock Swap, KB Financial Group expects to be able to adopt an efficient management structure that can flexibly respond to regulatory developments and other changes to its business environment and to promote sustainable growth by contributing to the maximization of synergies among affiliated companies of KB Financial Group, through an increase in customer convenience and benefits and the strengthening of its competitiveness.
| 8. | Schedule for the Stock Swap |
| Event |
Date | |||||
| Date of the Stock Swap Agreement | April 14, 2017 | |||||
| Record date | April 24, 2017 | |||||
| Closure of the shareholder register | Start date | April 25, 2017 | ||||
| End date | April 27, 2017 | |||||
| Dissent filing period | Start date | April 27, 2017 | ||||
| End date | May 11, 2017 | |||||
| Expected date of shareholders’ meeting | — | |||||
| Appraisal right exercise period | Start date | — | ||||
| End date | — | |||||
| Period for submission of old share certificates | Start date | — | ||||
| End date | — | |||||
| Expected period for suspension of trading | — | |||||
| Date of the Stock Swap (“Stock Swap Date”) | July 3, 2017 | |||||
| Expected date of delivery of share certificates | July 13, 2017 | |||||
| Expected date of listing of new shares | July 14, 2017 | |||||
| 9. | Name of the Complete Parent Company after the Stock Swap: KB Financial Group Inc. |
| 10. | Matters Relating to Appraisal Rights |
The Stock Swap will proceed as a small-scale stock swap pursuant to Article 360-10 of the KCC. Accordingly, shareholders of KB Financial Group will not be granted any appraisal rights.
| 11. | Back Door Listing |
Not applicable
| 12. | Other Entity’s Fulfillment of Conditions for Back Door Listing |
Not applicable
| 13. | Date of Resolution of the Board of Directors: April 14, 2017 |
|
Non-executive directors |
Present: 7 | |
| Absent: 0 |
| 14. | Agreements for Put Options, Call Options, Put Back Options, etc. |
Not applicable
| 15. | Applicability of Securities Registration Statement Filing Requirement: Yes |
| 16. | Other Investment Considerations |
| a. | In order to secure the votes required to obtain approval for the Stock Swap at the shareholders’ meeting of KB Capital and to provide such shareholders of KB Capital with an additional opportunity to collect on their investments, KB Financial Group will conduct the Tender Offer for 10,311,498 KB Capital common shares from April 17, 2017 to May 12, 2017 at a price of KRW 27,500 per share (the “Tender Offer Price”). This Tender Offer Price is higher than the swap price of KRW 25,320 and the appraisal right exercise price of KRW 25,234. Details can be found in the Tender Offer Notice and the Tender Offer Statement, each to be filed on April 17, 2017 (see dart.fss.or.kr). |
Upon the completion of the Tender Offer on May 12, 2017, the number of KB Capital shares owned by KB Financial Group will change. Accordingly, once the results of the Tender Offer become final, KB Financial Group plans to disclose the revised number of KB Capital shares it owns through an amendment filing.
| b. | In the case of KB Financial Group, the Stock Swap will proceed as a small-scale stock swap pursuant to Article 360-10 of the KCC. Accordingly, an approval by the board of directors will replace an approval of the general meeting of shareholders required under paragraph (1) of Article 360-3 of the KCC. |
| c. | The Stock Swap will proceed in accordance with the special rules for stock swaps under Article 62-2 of the Financial Holding Company Act. However, as a New York Stock Exchange-listed company, KB Financial Group requires a 10-day prior notice period for a record date, and therefore will follow paragraph (4) of Article 360-10 of the KCC, which requires a public announcement to be issued within two weeks after execution of the Stock Swap Agreement, and issue a public announcement on April 27, 2017 (with a record date of April 24, 2017). In addition, for the protection of shareholders’ interests, a period of two weeks will be provided for shareholders to submit in writing any notices of opposition to the Stock Swap pursuant to paragraph (5) of Article 360-10 of the KCC. All other procedures in connection with the Stock Swap will be governed by Article 62-2 of the Financial Holding Company Act, and for additional details, please refer to the securities registration statement and prospectus relating to the Stock Swap to be submitted by KB Financial Group. |
| d. | As the Stock Swap will proceed as a small-scale stock swap pursuant to Article 360-10 of the KCC, dissenting shareholders of KB Financial Group will have no appraisal rights. However, if shareholders owning in the aggregate 20% or more of the total number of shares issued by KB Financial Group oppose the Stock Swap, the small-scale stock swap procedure may be changed to an ordinary stock swap procedure pursuant to paragraph (5) of Article 360-10 of the KCC. The period for shareholders to submit any notices of opposition will be from April 27, 2017 to May 11, 2017. |
| e. | Upon the occurrence of any of the following events, the Stock Swap Agreement between KB Financial Group and KB Capital may be amended or terminated: |
| (1) | At any time prior to the Stock Swap Date, KB Financial Group and KB Capital may terminate the Stock Swap Agreement by written agreement. |
| (2) | Until the Stock Swap Date, if any matters relating to the terms and conditions of the Stock Swap Agreement violate any relevant laws or accounting standards, KB Financial Group and KB Capital may, by mutual agreement, amend the Stock Swap Agreement to conform to the relevant laws and accounting standards (for the avoidance of doubt, each party’s representative director has been delegated the authority to make such amendments). |
| (3) | If, within two weeks of the public announcement or notice of the Stock Swap (the relevant record date), shareholders owning 20% or more of the total number of shares issued by KB Financial Group provide notice, in writing, of their opposition to the Stock Swap, either party may terminate the Stock Swap Agreement. |
| (4) | If the necessary authorizations or approvals from the board of directors, the general meeting of shareholders, the government or other relevant authorities are not obtained, or if the Stock Swap results in an incurable violation of law which is expected to have a material adverse effect on either party, such party may terminate the Stock Swap Agreement. |
| (5) | If any of the following events occurs before the Stock Swap Date, KB Financial Group and KB Capital may, through consultation, terminate or amend the Stock Swap Agreement. |
| i. | There is a material adverse change to the assets or management status of either party as a result of a force majeure event or other causes. |
| ii. | The swap ratio set forth in the Stock Swap Agreement cannot be maintained due to its unfairness or the occurrence of other material causes. |
| (6) | KB Financial Group and KB Capital may enter into a separate agreement regarding matters necessary for the Stock Swap, in which case such separate agreement will be deemed to be a part of the Stock Swap Agreement. |
| (7) | If the Stock Swap Agreement is terminated pursuant to (1) – (6) above, neither KB Financial Group nor KB Capital nor any of their respective employees, agents or other representatives will have any liability under the Stock Swap Agreement or in relation to the Stock Swap. |
| f. | Swap ratio and allotment and issuance of new shares, transfer of treasury shares |
| (1) | KB Financial Group will newly issue registered common shares of KB Financial Group or transfer its treasury shares in accordance with the ratio set forth in “3. Swap Ratio” with respect to registered common shares issued by KB Capital that are owned by the relevant shareholders appearing in KB Capital’s shareholder register as of the Stock Swap Date. The shares issued by KB Capital that are owned by KB Financial Group as of the Stock Swap Date will not be included in the Stock Swap, and therefore, KB Financial Group will not newly issue registered common shares of KB Financial Group or transfer its treasury shares with respect to such shares. |
| (2) | The aggregate number of registered common shares of KB Financial Group to be newly issued to KB Capital shareholders in the Stock Swap (the “New Shares”), and the number of treasury shares held by KB Financial Group to be transferred (the “Treasury Shares”), to KB Capital shareholders in the Stock Swap will be no more than 5,363,669 shares. In this connection, excluding the treasury shares that will be transferred to KB Insurance shareholders in a stock swap involving KB Insurance shares, KB Financial Group plans to utilize the remaining treasury shares it holds for purposes of the Stock Swap. Therefore, if the number of KB Financial Group shares derived by multiplying the total number of KB Capital shares subject to the Stock Swap (which will be determined based on the number of KB Capital shares acquired by KB Financial Group pursuant to the Tender Offer) by the swap ratio is less than the “Maximum Number of Transferable Treasury Shares” of KB Financial Group (as defined below), no additional new shares will need to be issued. (Treasury shares held by KB Financial Group will be utilized as consideration in a stock swap involving KB Insurance shares to the maximum extent possible, and any remaining treasury shares held by KB Financial Group will be utilized as consideration in the Stock Swap.) In this case, dilution of the equity interests held by KB Financial Group shareholders that would otherwise occur due to an issuance of new common shares will not occur. Regarding the foregoing, the Stock Swap Agreement provides as follows: |
| (i) | “Subject to the number of issued KB Capital shares acquired by KB Financial Group from KB Capital shareholders pursuant to the tender offer approved by KB Financial Group’s board of directors on April 14, 2017 (the “Tender Offer”): |
| a. | as of the Stock Swap Date, if the number of KB Financial Group shares derived by multiplying the remaining number of issued KB Capital shares owned by KB Capital shareholders other than KB Financial Group (the “KBC Subject Shares”) by the swap ratio (the “KBFG Consideration Shares”) is no more than the Maximum Number of Transferable Treasury Shares, no New Shares shall be issued by KB Financial Group, and instead KB Financial Group shall transfer Treasury Shares equal to the number of KBFG Consideration Shares to such KB Capital shareholders; |
Maximum Number of Transferable Treasury Shares = 21,546,313 Treasury Shares – the final number of treasury shares of KB Financial Group transferred pursuant to the stock swap agreement dated April 14, 2017 between KB Financial Group and KB Insurance
| b. | if the number of KBFG Consideration Shares exceeds the Maximum Number of Transferable Treasury Shares, KB Financial Group shall transfer the Maximum Number of Transferable Treasury Shares, and issue New Shares in a number equal to such excess, to such KB Capital shareholders. |
| (ii) | The number of New Shares and Treasury Shares above may decrease due to certain adjustments, including as a result of cash payments for fractional shares. |
| (iii) | The determination of the final number of New Shares and Treasury Shares to be calculated in accordance with the above, following the completion of the Tender Offer and within the scope set forth in Paragraph 2 of this Article, shall be delegated to each representative director; each representative director shall, either simultaneously with or promptly after the public filing of the results of the Tender Offer, publicly file the final number of New Shares and Treasury Shares.” |
KB Financial Group will disclose the final number of New Shares and Treasury Shares through an amendment filing.
| g. | On April 14, 2017, the board of directors of KB Financial Group also passed a resolution to replace the approval of the Stock Swap at the general meeting of shareholders with the approval of the Stock Swap by the board of directors. |
| h. | The above matters and schedule may be amended through consultation with or approval by the relevant authorities or through consultation between the contracting parties. |
| i. | Specific matters relating to the Stock Swap that have not been determined by the board of directors of KB Financial Group and all matters in connection with the timing, procedures and the number of New Shares and Treasury Shares to be finalized based on the results of the Tender Offer are delegated to the representative director. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| KB Financial Group Inc. | ||||||
| (Registrant) | ||||||
| Date: April 14, 2017 |
By: /s/ Jae Keun Lee | |||||
| (Signature) | ||||||
| Name: | Jae Keun Lee | |||||
| Title: | Managing Director and Chief Financial Officer | |||||