The deal, which would give Lone Star a $5 billion profit, has been up in the air since September as an uproar over the
private equity firm's profit margin on the sale has sparked a criminal
probe into the bank and Lone Star. However the sale is also seen as a test of the new administration's commitment to attracting foreign investment. The Deal's Andrew Salmon
writes:
The delay dents optimism that South Korea's new pro-business administration will speed the long-stalled transaction through the regulatory maze. The previous government had refused to clear the deal until Lone Star's legal appeal against charges of manipulating the stock price of Korea Exchange Bank's card unit was resolved. Also holding up approval is the trial of former government officials accused of taking bribes from Lone Star to help it buy Korea Exchange Bank in 2003 on the cheap.
In February, a South Korean court
shocked
the buyout firm when it unexpectedly found Paul Yoo, the local head of
Lone Star Funds, guilty of stock price manipulation and sentenced him
to five years in prison. HSBC agreed to buy Korea Exchange Bank from Lone Star after an earlier
deal to sell the lender to Kookmin Bank was scrapped in November 2006
because of the prosecution investigation. Lone Star has been trying to
sell its stake in the bank for two years.
- George White
See TheDeal.com story on extension
See TheDeal.com story on Paul Yoo
