Regulators to rule on Lone Star's KEB case next month
South Korean regulators are slated to make a final ruling on October 6 regarding allegations that US buyout firm Lone Star manipulated Korea Exchange Bank’s (KEB) stock price in 2003 to gain a higher valuation for its exit.
According to Reuters, if Lone Star is found guilty it will be ruled unfit to be KEB's majority shareholder, and the firm may be forced to sell down its stake to 10% or less. Lone Star currently owns 51% of KEB, which Hana Financial Group said it would acquire in November of last year for approximately $4.2 billion. Yet, that sale process has been repeatedly stalled as regulators seek to resolve the issue at hand.
In June, Lone Star said it would file a petition to void stock manipulation charges leveled against it and Paul Yoo, the head of its South Korea unit who was given a five-year jail sentence for his role in deliberately manipulating stock prices of KEB's credit card unit.
Lone Star first announced its intention to exit KEB in 2006 to domestic player Kookmin Bank for $7 billion. Regulators rejected that transaction, leading Lone Star to relaunch the action process in early 2010. Since then, players such as MBK Partners and the Australia and New Zealand Banking Group (ANZ) have also talked to Lone Star about acquiring the asset, but regulations and financing hurdles have resulted in Hana Bank being the last-standing bidder.
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