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(4th LD) Lone Star sells 13.6 pct stake in Korea Exchange Bank
By Kim Yoo-seung
SEOUL, June 22 (Yonhap) -- U.S.-based investment fund Lone Star Funds said Friday that it has sold a 13.6 percent stake in Korea Exchange Bank (KEB) for 1.19 trillion won (US$1.28 billion) through a block sale.
Lone Star Funds, previously holding a 64.62 percent stake in South Korea's fifth-largest lender, sold 87.7 million KEB shares for 13,600 won each to international and local financial investors overnight, the company said in a statement.
"The purpose of this sale was to pay down debt,”said LSF Chairman John Grayken.“Lone Star still owns 51.02 percent of KEB and will continue to hold this investment for sale to a strategic investor.”
"We are actively looking for a strategic investor who can take KEB to the next level,”he added.
The sale price was set at a 6.8 percent discount from Thursday's closing price of 14,600 won. KEB shares closed down 3.42 percent at 14,100 won on the Seoul bourse.
Combined with 354.2 billion won worth of Lone Star Funds received in dividends in February, it has so far recouped 1.55 trillion won, or 71.8 percent of its total investment in KEB. The firm bought a 50.5 percent stake in the lender for 1.4 trillion won in 2003, and invested 2.2 trillion won in KEB in May last year.
Hana Financial Group, the nation's No. 3 financial services group by assets, and the National Agricultural Cooperative Federation (Nonghyup) said that they participated in the block sale. Each bought less than 1 percent of the shares offered by Lone Star Funds.
The nation's top lender, Kookmin Bank, and Singapore's DBS Group Holdings Ltd., which had held talks to buy KEB, said they did not participate.
The sale comes less than two weeks after Lone Star Chairman John Grayken told Yonhap News Agency that the fund may sell KEB before a Seoul court rules on the legality of its acquisition of the bank.
The Seoul court is assessing whether there was any wrongdoing by South Korean government officials and former bank officials involved in the sale. They are also looking into an allegation that Korea Exchange's financial strength was deliberately underestimated to facilitate the bank's sale to Lone Star.
In the midst of the legal dispute, the buy-out funds' talks with two prospective buyers fell apart. Lone Star Funds signed an agreement in May last year to sell all its shares to Kookmin Bank.
However, in November last year the fund stopped the deal, which was expected to give it a profit of more than 4 trillion won, citing the Seoul prosecution's investigation into the legality of its takeover of Korea Exchange.
Earlier this month, DBS Group Holdings said it withdrew from talks with Lone Star Funds over acquiring KEB.
ysk@yna.co.kr
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