Negotiations for the $3.2 billion sale of most of the manufacturing assets of Daewoo Electronics to the Walid Alomar & Associates investment group have been terminated.
The break off comes as no surprise. The deal appeared to turn shaky earlier this year when Korea's Hanvit Bank, Daewoo's lead domestic creditor, took control of the company. Hanvit quickly launched an inquiry into Walid Alomar's financial condition and demanded details on how the group planned to raise the funds. When acceptable answers were not forthcoming, Hanvit indicated it wasn't taking the buy-up offer seriously.
Korean media quote Hanvit officials as saying Alomar was unable to come up with the $1.2 billion needed to seal the transaction by December 9, the date Alomar's exclusive negotiating rights expired. Hanvit said it would proceed with a financial restructuring program for Daewoo Electronics while it continues to seek a buyer for all or part of the business. Alomar was offering to acquire all operations in Korea, North America and Europe, but none of the electronics manufacturer's $4.5 billion debt.
As part of negotiations involving all of the Daewoo Group, domestic creditors have tentatively agreed to convert about 15 percent of the debt owed by Daewoo Electronics into stock and the rest into convertible notes. But because of a reported debt-to-assets shortfall of some $2.4 billion, foreign creditors are balking. The Korean bank creditors are offering to buy up the foreign debt of Daewoo Electronics at 34 percent of face value.
For previous TWICE Online coverage of this topic see...
Daewoo Sale Chances Fading, 18-Oct-1999
Daewoo Group Is Breaking Up, 11-Oct-1999
New Hurdles May Arise In Daewoo Takeover, 20-Sep-1999
New Management For Daewoo, 08-Sep-1999