KEXIM to sell KEB stake as part of Lone Star transaction
Export-Import Bank of Korea (KEXIM) will sell a 6.25% stake in Korea Exchange Bank to Hana Financial Group as a “tag along” to Hana’s purchase of Lone Star’s holding in the bank, according to Yonhap, a South Korean news agency. The tag along right is designed to protect minor shareholders by allowing them to exit at the same time – and at the same price – as a major shareholder.
Given that Hana is paying $4.1 billion for Lone Star's 51.02% stake, it must now hand over an additional $513.3 million for KEXIM's holding. KEXIM is expected to lock in a $209.1 million profit from the sale.
Lone Star, which bought the stake in KEB in 2003, has been trying to exit for some months, but Korean regulators have held off on granting approval due to ongoing legal disputes about alleged stock manipulation relating to the bank's credit card unit. This led to Paul Yoo, the former head of Lone Star in South Korea, being detained last week after a local judge labeled him a flight risk.
Lone Star and Hana agreed in early July to extend their negotiations over the sale by six months. A few days later, they reportedly settled on a purchase price of $4.16 billion, a $266 million reduction on what had previously been discussed. KEB had recently defied the regulators by approving a dividend payout that translated into a $466.6 million windfall for Lone Star. In total, the private equity firm is said to have received dividends worth $1.6 billion from KEB and a further $1.1 billion from the sale of a 13.6% stake in the business.
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