Steel Partners Issues Statement on Changes to KT&G Board of Directors

Business Wire,  March 14, 2008  

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SEOUL, South Korea -- In response to media inquiries, Steel Partners II today issued the following statement to the media regarding changes to the Board of Directors of the KT&G Corporation (Korea Stock Exchange: 033780):

Steel Partners welcomes the addition of four highly qualified independent directors to the Board of Directors of KT&G Corporation. Steel Partners especially applauds KT&G's backing of Mr. Jin Moo Lee, CEO & President of S.C. Johnson Korea and Mr. Jin Ho Chang, Associate Professor, Yonsei University's School of Business. Steel Partners believes their nominations, along with the other significant improvements to the operations and corporate governance of KT&G since Warren Lichtenstein, Managing Partner of Steel Partners joined the Board in March 2006, marks a turning point in the company's history that will not go unnoticed by shareholders.

Mr. Lichtenstein will step down as an outside director of KT&G, coinciding with the election of Mr. Lee and Mr. Chang.

Mr. Lichtenstein stated: "I appreciate the opportunity KT&G has given me to contribute as a Board member to significantly improve shareholder value during my tenure. I believe KT&G is well positioned to effectively compete in the global consolidation that is taking place in the tobacco industry. I believe KT&G's focus must remain on its core businesses - tobacco, ginseng and real estate development - while strategically divesting its non-core assets. With the addition of Mr. Lee and Mr. Chang to the Board, I am confident that the Company will continue in the right direction."

Since August 2006, KT&G has returned to shareholders an unprecedented 1.2 Trillion KRW (approximately 1.3 Billion USD) via stock buybacks and is slated to pay out 909 Billion KRW (approximately 1 Billion USD) in dividends during the first half of 2008. In the meantime, net sales grew at a healthy rate of 6.6% last year versus 2006, while operating earnings grew at a rate of 14.1% as a result of management's efforts to increase exports and net ASP/pack. Since March 2006, KT&G's share price has risen more than 38%.

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