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Hana-Lone Star deal totally up to FSC
The Financial Services Commission will announce the procedures for its coming action under which Lone Star Funds will be deprived of its status as the biggest shareholder of Korea Exchange Bank.
The regulator’s stance comes several hours after U.S.-based Lone Star on Thursday expressed its position not to appeal to the Supreme Court for the Seoul High Court’s Oct. 6 verdict that the U.S.-based fund rigged stocks of KEB’s credit card affiliate.
“(Early in the morning) Lone Star informed the FSC of its intention not to appeal to the Supreme Court,” FSC Chairman Kim Seok-dong said.
He said the regulatory body would unveil the timetable ― for the scheduled action to order the fund to sell a large portion of stake in KEB ― early next week.
An FSC official said the timetable will involve three steps ― prior notification to Lone Star, instructing the fund to meet the requirements for shareholder eligibility, and ordering a stake sale.
“I believe the timetable will be made public on Monday,” he said. “But the detailed sale terms will be unveiled later through FSC panel discussion.”
The primary issue for the “sale terms” is whether the FSC will take stern punitive action on the buyout fund, which could be linked to Hana Financial Group’s failure in its planned takeover of KEB.
Should authorities instruct the fund to dispose of shares on the stock market to anonymous investors at market-determined prices, Hana Financial could possibly fail to take over the bank.
But under the scenario that the regulator simply orders a stake sale, Lone Star may choose to hand over the dominant stake to Hana Financial. The two parties signed a preliminary deal to trade KEB shares in November 2010.
On Thursday evening, about 2,000 unionized workers of KEB and citizens held a rally in front of the FSC building in Yeouido, Seoul, calling for the regulator to take tough disciplinary action against the fund.
On Friday, the KEB union, in coordination with the Korean Financial Industry Union, will hold a press conference in Yeouido to ask the FSC not to pave the way for Lone Star to receive management premium by selling the KEB shares to a single acquirer.
“We suggest the authorities order dispersive stake sale under which a number of investors purchase a part of shares, respectively, or market price-based sale on the stock market,” a KEB union leader said.
Another issue for the sale terms is deadline for the forced sale. For example, the FSC could designate the deadline within six months as the banking laws stipulate.
Hana Financial welcomed Lone Star’s scrapping to appeal the ruling.
An appeal from Lone Star could have break down the bilateral preliminary deal, which expires on Nov. 30.
A Hana source predicted that the FSC will ultimately endorse the takeover deal by handing down a simple stake sale under the banking laws.
While a group of analysts also forecast Hana’s successful acquisition, Hana and Lone Star expected to renegotiate the takeover price as KEB’s share price is quire low ― 7,920 won on Oct. 13 ― compared to contract price of 13,390 won.
There are speculations that Lone Star dropped the appeal under the condition that Hana will not seek to slash the takeover price heavily despite the currently lower stock price.
By Kim Yon-se (kys@heraldcorp.com)
The Financial Services Commission will announce the procedures for its coming action under which Lone Star Funds will be deprived of its status as the biggest shareholder of Korea Exchange Bank.
The regulator’s stance comes several hours after U.S.-based Lone Star on Thursday expressed its position not to appeal to the Supreme Court for the Seoul High Court’s Oct. 6 verdict that the U.S.-based fund rigged stocks of KEB’s credit card affiliate.
“(Early in the morning) Lone Star informed the FSC of its intention not to appeal to the Supreme Court,” FSC Chairman Kim Seok-dong said.
He said the regulatory body would unveil the timetable ― for the scheduled action to order the fund to sell a large portion of stake in KEB ― early next week.
An FSC official said the timetable will involve three steps ― prior notification to Lone Star, instructing the fund to meet the requirements for shareholder eligibility, and ordering a stake sale.
“I believe the timetable will be made public on Monday,” he said. “But the detailed sale terms will be unveiled later through FSC panel discussion.”
The primary issue for the “sale terms” is whether the FSC will take stern punitive action on the buyout fund, which could be linked to Hana Financial Group’s failure in its planned takeover of KEB.
Should authorities instruct the fund to dispose of shares on the stock market to anonymous investors at market-determined prices, Hana Financial could possibly fail to take over the bank.
But under the scenario that the regulator simply orders a stake sale, Lone Star may choose to hand over the dominant stake to Hana Financial. The two parties signed a preliminary deal to trade KEB shares in November 2010.
On Thursday evening, about 2,000 unionized workers of KEB and citizens held a rally in front of the FSC building in Yeouido, Seoul, calling for the regulator to take tough disciplinary action against the fund.
On Friday, the KEB union, in coordination with the Korean Financial Industry Union, will hold a press conference in Yeouido to ask the FSC not to pave the way for Lone Star to receive management premium by selling the KEB shares to a single acquirer.
“We suggest the authorities order dispersive stake sale under which a number of investors purchase a part of shares, respectively, or market price-based sale on the stock market,” a KEB union leader said.
Another issue for the sale terms is deadline for the forced sale. For example, the FSC could designate the deadline within six months as the banking laws stipulate.
Hana Financial welcomed Lone Star’s scrapping to appeal the ruling.
An appeal from Lone Star could have break down the bilateral preliminary deal, which expires on Nov. 30.
A Hana source predicted that the FSC will ultimately endorse the takeover deal by handing down a simple stake sale under the banking laws.
While a group of analysts also forecast Hana’s successful acquisition, Hana and Lone Star expected to renegotiate the takeover price as KEB’s share price is quire low ― 7,920 won on Oct. 13 ― compared to contract price of 13,390 won.
There are speculations that Lone Star dropped the appeal under the condition that Hana will not seek to slash the takeover price heavily despite the currently lower stock price.
By Kim Yon-se (kys@heraldcorp.com)
