|Eric Suh, chief executive of Tong Yang Securities, talks to the press during a briefing in Yeouido, Seoul, Tuesday. (Yonhap)|
“We are very positive about the merger deal. I believe it will allow us a fresh start,” said Eric Suh, CEO of Tong Yang Securities at a press meeting.
He added that Yuanta was financially “very strong and stable,” and that the company’s solidity as Taiwan’s No. 1 brokerage house would provide “much-needed stability” to Tong Yang.
“We believe the merger will allow us to regain the credibility we lost in the aftermath of a series of mishaps and regulatory concerns over the past year,” he said.
Yuanta Securities Asia Financial Services, a wholly owned subsidiary of the Taiwanese brokerage house, signed last Friday a stock purchase agreement to acquire a 27.06 percent stake in Tong Yang Securities at some 120 billion won ($112 million).
The Taiwan-based firm also agreed to inject an additional 150 billion to purchase new shares to be issued by Tong Yang in order to secure a controlling share (50.3 percent) in Tong Yang, the CEO noted.
The cash injection, he said, is crucial for the fate of the cash-strapped Tong Yang’s brokerage unit.
The mid-sized brokerage firm ― currently owning some 8.84 trillion in assets ― went through a rough patch in 2013 as customers withdrew nearly 6 trillion won in less than three months following the group’s default in September.
“We knew we wouldn’t be able to pay off the 150 billion won worth of debt that’s maturing in June this year without help from Yuanta,” Suh said. “We were running out of time and that’s why we chose to seal the deal quickly.”
Yuanta was the sole bidder for Tong Yang Group’s brokerage house, which was allegedly involved in underwriting and issuing fraudulent bonds of its affiliates to retail investors to offset the group’s liquidity crunch.
Suh, who took the helm of the troubled brokerage house in December 2013, added that the merger scheme would help Tong Yang get back on track.
Market insiders said, however, that there were still many unknowns ― Tong Yang may have to cough up an undetermined amount of compensation for causing financial losses to allegedly more than 20,000 individual investors.
The merger deal also still needs to pass the evaluation process and approval from financial regulators from both countries.
“We are still positive about the future. With Yuanta’s established global network and financial resources, Tong Yang can make a fresh start,” he added.
By Oh Kyu-wook (email@example.com)