KDB to have price negotiations to buy Dongbu Metal

SEOUL, May 21 (Yonhap) -- South Korea's state-run Korea Development Bank (KDB)
said Thursday it plans to start price negotiations with Dongbu Group to buy the
group's metal unit as part of moves to restructure large companies.

KDB plans to buy a 100 percent stake in Dongbu Metal Co., through private equity
funds (PEFs) after inviting institutional investors.
"We are seeking to purchase Dongbu Metal by calling in investors like state
pension funds," an official at KDB said. "If price talks go smoothly, we may wrap
up the deal by the end of next month."
Last week, Min Euoo-sung, chairman of KDB, said the policy lender plans to set up
PEFs with institutional investors to buy non-core assets from large firms as part
of efforts to help revamp highly leveraged companies. KDB plans to offer original
owners the right to buy assets back from the lender so as to regain management
after market conditions improve.
The sale of Dongbu Metal would mark the first case of KDB buying a company
through PEFs. Market watchers estimated that the deal may reach around 700
billion won (US$563.6 million).
Dongbu Group has been seeking to sell the metal unit since last year to secure
liquidity necessary.
South Korean banks are in the process of overhauling highly leveraged companies,
including large firms, to head off their negative impact on the economy.
Liquidity-squeezed large business groups are expected to sign agreements with
creditor banks calling for enhancing their financial health this month.
sooyeon@yna.co.kr
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