The Hindu : Business : Daewoo-Videocon deal in jeopardy

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Thursday, Jan 04, 2007
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Daewoo-Videocon deal in jeopardy

`Terms put forward by consortium are unacceptable'

SEOUL: A deal to sell South Korea's third-largest electronics maker to a consortium led by India's Videocon Industries is in jeopardy because of differences over pricing, creditors said on Wednesday.

A memorandum of understanding was signed in October last to sell Daewoo Electronics for 700 billion won ($730 million) to the consortium of Videocon and Ripplewood Holdings, a U.S. private equity fund.

Since then some 40 creditors, led by Korea Asset Management Corporation and Woori Bank, have been in talks with the consortium to fix terms for the sale.

But the potential buyer has called for a 13 per cent cut in the price and urged creditors to reinvest a considerable part of the proceeds in the company in the form of convertible bonds. "The terms put forward by the consortium are just unacceptable,'' a spokesman for the state-financed Korea Asset Management Corporation told AFP.

"Under this offer there will be little cash left for us to redeem,'' he said. His corporation has a 57.4 per cent stake in Daewoo Electronics.

A senior official of Woori Bank, which leads the negotiations, said creditors would continue talks and denied news reports that the deal would be scrapped. "We want to complete the collection of opinions from all the creditors by the end of this week but the negotiations will continue with Videocon,'' said the official, Park Ki-Hoon.

Daewoo Electronics is a former unit of the Daewoo Group, which collapsed in 1999 with $80 billion in debts in one of the world's largest corporate failures. — AFP

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