Private Equity Korea » Daewoo Electronics

Daewoo to return deposits to Entekhab

Stephanie Lim — Thu, 07 Jul 2011 08:50:06 +0000

Maeil Business News has reported that the creditors of Daewoo Electronics have decided to return the deposits that preferred bidder Entekhab paid earlier this year. The creditors likely made this decision in reaction to Entekhab’s lawsuit against the former, in what creditors believe to be Entekhab’s attempt to get back their security deposit of 57.8 billion won ($54.3 million). Instead of waiting for a court decision, the creditors returned the deposit to encourage progression of the sale.

Unfortunately, as reported previously, creditors of Daewoo were also unsuccessful in coming to an agreement with Electrolux and the creditors decided to restart the sale. Maeil quotes the creditors as saying “Daewoo Electronics’ liquidity is not in great shape. We need to solve this issue first, and then we will pursue the new auction after some time.”

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Daewoo’s creditors deny Electrolux, may restart sale

Stephanie Lim — Wed, 29 Jun 2011 09:24:32 +0000

According to Maeil Business News, the creditors of Daewoo Electronics have ended talks with Electrolux after the Swedish electronics maker demanded a discount greater than 5 percent and expressed desire to divide Daewoo’s capital for a partial takeover

Creditors have called off all previous concessions that were made and are now considering restarting the entire sale. Reuters has reported that lead creditor, Woori Bank, rejected the demands and said “the only alternative is to start off with a clean slate.”

However, ongoing issues with preferred bidder, Iranian electronics firm Entekhab, have stalled the deal and put the entire sale in jeopardy. Entekhab failed to make payments and follow through with funding plans, pushing Daewoo’s creditors to move on to the second highest bidder, Electrolux.

Interestingly enough, the Iranian company has filed a lawsuit against the creditors on grounds that their contract was illegally terminated. This legal complication will make progression of the Daewoo Electronics sale difficult and prolonged.

This sale for a 97.5 percent stake in Daewoo Electronics has caught the attention of more overseas investors than domestic, since the company is unable to price their products competitively compared to local conglomerates like Samsung and LG, as well as rival companies in nearby China.

Creditors may sell Daewoo Elec. to Electrolux AB

Stephanie Lim — Wed, 22 Jun 2011 09:23:53 +0000

Various news sources have reported that the creditors of Daewoo Electronics may be looking for a new buyer for their collective 97.5 percent stake. According to the Korea Herald, state-owned debt clearer KAMCO holds the largest stake in Daewoo Electronics with 48 percent, followed by Korea Exchange Bank with 6.6 percent, and Shinhan Bank with 5.8 percent.

According to Maeil Business News, the creditors could end negotiations with Entekhab Industrial Group and resume talks with second preferred bidder Electrolux AB since their deal with the former has been falling apart.

Swedish Electrolux, the world’s second-largest appliance maker, will complete due diligence on Daewoo Electronics this week and decide whether or not it will initiate talks with creditors.

During the initial bidding in 2010, Electrolux bid 600 billion won ($553.5 million) for the stake, and then offered to pay an additional 30 billion won in September when the creditors were in negotiations with Entekhab. However, some market observers have speculated that Electrolux will seek a price cut, as the value of the Korean firm has deteriorated as of late.

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Electrolux could pick up falling Daewoo Electronics

Stephanie Lim — Thu, 02 Jun 2011 02:32:37 +0000

Repeated failures to sell Daewoo Electronics have significantly deteriorated the value of the company. Daewoo Electronics, one of Korea’s top three appliance makers, was once worth an estimated 605 billion won.

However, during the last sale attempt, Iran’s Entekhab brought the purchase price down to 413.7 billion won. Daewoo’s performance fell during the negotiations, taking the company from an operating profit of 40 billion won in 2009 to 17.6 billion in 2010. The company saw negative net profits for both years.

The latest negotiations with the second highest bidder, Sweden’s Electrolux, are rumored to have reduced the value to around 300 billion won. Electrolux initially offered 600 billion won in 2010, but is expected to bid half that amount this time.

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Entekhab’s acquisition of Daewoo Electronics in jeopardy

Brett Moffat — Tue, 24 May 2011 12:21:33 +0000

The creditors of Daewoo Electronics, one of South Korea’s top three appliance makers, have failed to finalize the deal with selected preferred bidder, Iranian h0me appliance maker Entekhab, Korean media sources reported on Tuesday.

Entekhab which has paid 57.8 billion won in down payment of the 413.7 billion won purchase price has requested a 60 billion won discount of the final price.

The Iranian firm is requesting the discount due to complications with supply contracts with Daewoo Electronics’ current partners, including Bosh and Electrolux, along with claimed that it could not properly assess the value of Daewoo Electronics, as the creditors denied its request to extend the period for examining the company before the acquisition contract was signed.

The primary creditor, Woori Bank, is currently collecting the opinions of the other creditors on cutting the acquisition price but only have until the end of May to conclude the deal

As reported earlier, this is the fourth time that Daewoo Electronics creditors, including Korea Asset Management Corp. and Woori Bank, have tried to sell the company.

Courtesy of JoongAng Daily

In April last year creditors selected Entekhab as the preferred bidder, and signed the contract in November.

However the deadline for payments has been pushed back twice as Entekhab failed to make the date.

The creditors will need to seek an alternative method to sell Daewoo if they fail to reach an agreement with Entekhab. The most likely possibilities are to start negotiating with Electrolux – who was runner-up in the previous bid – or to hold a new auction from scratch.

Sources: JoongAng Daily, MK Business News

Deadline for sale of Daewoo Electronics Extended

Stephanie Lim — Wed, 06 Apr 2011 01:12:43 +0000

MK Business news has reported that creditors of Daewoo Electronics have postponed the sale for another month. The creditor group for Daewoo Elec. has granted Enteckhab Industrial Group, a multinational electronics company based in Iran, another extension to make the payments required to conclude the sale. The deadline from the previous two-month extension was set to be April 7th. This extension will most likely be the final notice. If payments are not received by May, creditors may need to restart the entire sale process.

Creditors of Daewoo Elec., including Woori Bank and the Korea Asset Management Corporation (KAMCO), confirmed that they are negotiating final adjustment to the payment schedule and that the amended contract will be signed within the week. Enteckhab has already given KRW 57.8 billion to the creditors and needs to pay the remaining KRW 413.7 billion (USD 380.2 million) to complete the transaction.

If negotiations with Enteckhab fall through, the creditors will be forced approach the next bidder, Electrolux of Sweden.

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Entekhab Industrial requests postponement of payment for Daewoo Electronics (updated)

Brett Moffat — Wed, 09 Feb 2011 01:21:35 +0000

Entekhab Industrial has once again requested postponement in the payment for the acquisition of Daewoo Electronics the privately held South Korean electronic appliance maker to its creditors.

A report in Inews24 cited industry sources as saying that the Iran-based appliance maker did not submit the confirmation of investment by the deadline of yesterday and instead, requested postponement of the payment.

As reported earlier, Entekhab Industrial had agreed to acquire Daewoo for KRW 475bn (USD 419m) from the creditors but later once requested to extend the deadline of payment, failing to comply with the request of creditors to provide letters of confirmation related to its acquisition fund.

Source: Inews24 (translated)

Update:

The creditors of Daewoo Electronics have approved to extend their sale agreement over the stake in Daewoo to Entekhab Industrial, by two months, reported the Ajnews on February 11, 2011. The report cited the creditors group as saying that they have agreed on the idea to extend the deadline of the contract to 7 April 2011.

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Daewoo Electronics creditors to extend deadline for Entekhab Industrial to raise funds

Brett Moffat — Tue, 11 Jan 2011 00:07:27 +0000

Daewoo Electronics‘ creditors have extended the fundraising deadline for Entekhab Industrial for a potential acquisition of the unlisted electronic appliance maker to until 7 February.

An item in the Yonhap News cited CEO at KAMCO, Jang Young-cheol, as saying that the creditors decided to wait until that time for the Iranian company to prepare an acquisition fund. KAMCO is a state-run lead creditor of Daewoo Electronics.

According to an earlier report, Entekhab Industrial had agreed to acquire Daewoo for KRW 475bn (USD 419m) from the creditors but later failed to comply with the request of creditors to provide letters of confirmation related with its acquisition fund.

Source: Yonhap News

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Entekhab Industrial seeking investors to finance acquisition of Daewoo Electronics (Updated)

Brett Moffat — Tue, 14 Dec 2010 05:32:48 +0000

Entekhab Industrial plans to issue KRW 155bn (USD 137m) in convertible bonds in Daewoo Electronics, to finance the acquisition of the unlisted South Korean appliances maker, reported Money Today.

The paper cited industry sources in reporting that the Iran-based electronics player will borrow KRW 220bn, out of the KRW 475bn (USD 419m) price for Daewoo, from financial institutions.

Entekhab Industrial will use internal cash worth KRW 100bn to pay for the acquisition and will raise the remaining amount via the CB issue, the item added.

According to the report, the bonds will have three-year maturity term and carry an 8% coupon rate, with an yield to maturity of 12%. The report cited an unspecified insider at a financial firm as saying that Entekhab is still seeking investors in the bonds.

In November, creditors to Daewoo Electronics, the unlisted South Korean appliances maker, signed a sale agreement with Iran-based Entekhab Industrial.

Source: Money Today (translated)

Update: Entekhab Industrial has decided to finance 70% of the funds to acquire Daewoo Electronics by itself, reported Money Today.

The report cited M&A sector sources in reporting that the Iran-based company had initially planned to raise KRW 375bn of a total acquisition fund of KRW 475bn via borrowings and a convertible bond (CB) issuance.

According to the report, Entekhab has decided to change the financing plan since it could not find an investor for the CB issue and also failed to find lenders. Entekhab has submitted such a decision to the creditors of Daewoo Electronics, the item added.

As reported earlier, Entekhab Industrial will need to pay KRW 475bn (USD 419m) to buy Daewoo, an unlisted South Korean electrorical appliance maker, within three months from its signing the agreement.

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Daewoo Electronics’ creditors sign agreement with Entekhab

Brett Moffat — Tue, 09 Nov 2010 07:43:18 +0000

Creditors to Daewoo Electronics, the unlisted South Korean appliances maker, have signed a sale agreement with Iran-based Entekhab Industrial, reported Yonhap News.

The paper cited a spokesperson for the creditors as saying that the sale will be completed when Entekhab Industrial settles the down payment for the acquisition within three months time.

According to an unsourced part of the report, the price finally agreed is known to be KRW 577.7bn (USD 518m).

See here for previous posts on the sale of Daewoo Electronics.

Source: Yonhap News (translated)

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