The main creditor of South Korea's Haitai Confectionery said on June 22 that it had agreed to sell the insolvent firm to a UBS Capital-led consortium for
US$368.9m. Analysts said the deal would be a tonic for the country's confectionery industry, which had been plagued by Haitai's low-priced practices squeezing profit margins.
"We have agreed to sell assets of Haitai's confectionery operations to a UBS-led consortium," said Lee Jong-won, spokesman for Chohung Bank, the main creditor of Haitai.
"The final contract was expected to be signed as soon as the court's approval was received."
Dutch bank ABN Amro, the lead manager of the deal, had been negotiating with the UBS-led consortium, which includes big names such as JP Morgan and CVC Capital, since late April in Hong Kong.
Haitai was declared bankrupt in late 1997 and has been under court protection since May 2001 after creditors rejected its request to roll over its maturing debts.
Korea Development Bank officials said the UBS-led consortium was expected to take over the brand name, workforce and all production facilities of Haitai, which currently commands about 23 per cent of the domestic market.
In July 1999 creditors converted 840 billion won of loans to equity, becoming owners of 99 per cent of the company.
Local media had reported Nestle SA of Switzerland and South Korea's top-ranked confectionery company Lotte Confectionery were among those also interested in Haitai.
"The deal is good news for the local confectionery industry," said Hwang Chan, analyst at Dongwon Securities.
"But it leaves headaches for creditors because the proceeds from sales of confectionery assets were by far short of clean up debts."
Haitai was founded in 1945 and had grown to be one of the country's leading confectionery makers, together with Lotte.
But it ran into financial troubles in recent years after its investment in electronics and construction sector turned sour.
Source: Reuters