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

SEOUL, South Korea--(Business Wire)--
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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Text of Letter of Resignation:

WARREN G. LICHTENSTEIN
590 Madison Avenue, 32nd Floor
New York, New York 10022
Phone: (212) 520-2330
Facsimile: (212) 520-2331

February 4, 2008

Board of Directors
KT&G Corporation
100 Pyongchon-dong, Daedeog-gu
Daejeon, Korea

Gentlemen:

I am gratified that KT&G Corporation plans to back two highly
qualified independent directors, Mr. Jin Moo Lee and Mr. Jin Ho
Chang. I belive their nomination along with the other significant
improvements to the operations and corporate governance of KT&G since
I joined the Board almost two years ago marks a turning point in the
Company's history that will not go unnoticed by the shareholders.
KT&G has benefited by increasing its cash dividend to stockholders
and buying back shares with its excess capital. Since August 2006,
KT&G has returned to its 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
through the first quarter of 2008. In the meantime, net sales grew at
a healthy rate of 6.6% last year versus 2006 to 2,412.7 Billion KRW
from 2,262.7 Billion KRW, and operating earnings grew at a rate of
14.1% from 814.4 Billion KRW from 713.7 Billion KRW, as a result of
management's efforts to increase exports and net ASP/pack.

I believe KT&G is well positioned to effectively compete in the global
consolidation that is taking place in the tobacco industry. KT&G's
focus must remain on its core businesses - tobacco, ginseng and real
estate development - while strategically divesting non-core assets.
Unfortunately, due to other business interests, I am planning to
resign as an outside director of KT&G at the time of the upcoming AGM
but only to the extent Mr. Lee and Mr. Chang are elected. I am
confident that, with Mr. Lee and Mr. Chang on the Board, the Company
will continue in the right direction.

I appreciate the opportunity KT&G has given me in helping to
contribute as a Board member to significantly increase shareholder
value during my tenure. To show my appreciation for this opportunity
and consistent with KT&G's longstanding charitable endeavors in the
Korean community, I intend to donate all shares of stock I received
as a director to worthy charities in Korea. I wish the Board of
Directors of KT&G great success in the future.

Respectfully,

Warren Lichtenstein

566583-6
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Steel Partners
Jason Booth, 1-310-941-3616

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