Creditors of Taihan Electric Wire Co., one of South Korea's largest electrical materials manufacturers, have agreed to take responsibility for potential future liabilities in a bid to speed up the sale of the company, industrial sources said Thursday. 
   
The creditors, including Hana Bank, will take on Taihan Electric's potential debts, which have hampered the sales of the financially troubled company, with the aim of finalizing selling the company by January 2015, the sources said. 
   
Creditors will set up an escrow account to hold reserve funds in order to cover all latent liabilities of the company to make up for losses of its new owner, they said. An escrow account is a financial instrument established by a third party on behalf of the other two parties in a transaction. 
   
Creditors, in addition, reached an agreement not to break up the company into wire and non-wire business divisions, and to sell it whole. 
   
The 11 creditors of Taihan Electric hold 72.7 percent of the company's stakes, with the sales price to be around 700 billion won
(US$644 million).
   
"Although the company will not be broken up, creditors will ask for different prices for the two main operations to take into account different liabilities," an insider said.
   
He said the resolution of the liability issue will effectively permit the Hana Daetoo Securities Co. and JP Morgan consortium, tasked with arranging the sale, to open a bid next Wednesday to pick the preferred bidder for the company within the month. 
  
At present five funds and businesses, including private equity fund Hahn & Company, Glenwood and SG Group, have expressed interest in Taihan Electric.
   
Taihan Electric has been engaged in a tough restructuring process for several years, having sold off assets worth 3 trillion won in April 2009. It has been hit hard by the downturn and burdened with the remaining debt. When the chief executive of the company offered to surrender control in October 2013, creditors arranged a debt-to-equity swap of 700 billion won. 
   
The company has since undergone further streamlining and extensive reorganization to build up its operational capability in the past year. At present the company owes banks some 680 billion won in outstanding loans. (Yonhap)