A private equity fund of IBK Securities is expected to take over a large portion of Kumho Industrial worth 1 trillion won ($877 million), according to creditors of the Kumho Asiana Group’s unit.
On Friday, creditor banks selected IBK Securities, a brokerage unit of the state-run Industrial Bank of Korea, as the preferred bidder for a package of Kumho Asiana’s transportation units.
The M&A targets included Kumho Industrial’s 100 percent stake in Kumho Buslines, 38.74 percent in Seoul Express Bus Terminal, 12.3 percent in Daewoo Engineering & Construction, and 25 percent in Gyeonggi Expressway.
IBK Securities had expressed its intention to acquire the Kumho package by setting up a private equity fund to attract investors.
After signing a memorandum of understanding, the brokerage will conduct due diligence on the assets for two or three months.
Creditors forecast the takeover will be finalized at the end of first quarter 2012.
The financial status of Kumho Asiana Group has deteriorated over the past few years after it bit off more than it could chew in lavish M&A deals.
Especially crippling was the absorbing of Daewoo Engineering in 2006, in which Kumho Asiana agreed to pay 6.4 trillion won for a 72.1 percent stake in the builder.
About half of the money came from a group of financial investors. Due to its liquidity crisis, Kumho Asiana had attempted to raise emergency funds by selling its stakes in Daewoo Engineering.
However, the group struggled after facing a cash call worth around 4 trillion won from their investors, who exercised their rights to sell their shares in the builder back to Kumho Asiana at above-market prices at the end of the year.
By Kim Yon-se (email@example.com