Company up for grabs after debt reduction program
With 15 days left for a final tender to sell Daewoo Electronics, attention is focused on who will bite.
Creditors of Daewoo Electronics, including Korea Asset Management Corp. (KAMCO) and Woori Bank, plan to complete the sale of the electronics maker in September or October by picking a preferential bidder by the end of this month. Daewoo Electronics, which was spun off from the now-defunct Daewoo Group in 1999, is currently under a debt workout program. Creditors had planned to sell Daewoo Electronics after ending the workout program, but shortened the timetable.
"Given [Daewoo Electronics’] corporate value, it is an appropriate time for a sale," said Ban Wan-ho, director of the corporate debt workout team at KAMCO.
Under the current circumstances, Daewoo Electronics, which accounts for about 10 percent of the domestic electronics market, will probably be sold to a foreign company. In April, a total of 22 companies submitted their intention to buy Daewoo Electronics, and five bidders were short-listed. However, excluding one local venture-funding company, KTB Networks, the others were foreign firms. Of the four foreign bidders, one was believed to be a manufacturer and the other three were funds.
The names of foreign bidders are still publicly unknown, but people close to the matter say the bidders may be Videocon of India, TCL of China, Vestel of Turkey, and Whirlpool of the U.S. Chinese home appliance maker Haier, which had been cited as one of strong candidates to buy Daewoo Electronics, did not join in the running, after all. The sale price of Daewoo Electronics, which derives 80 percent of its revenues from exports, is also unclear. The electronics maker’s debts - worth 1.2 trillion won (1.3 billion USD) - as well as its recent poor earnings results, may bode ill in setting its sale price, estimated at between 500 billion and 1 trillion won, low for its status in the market. Creditors are sensitive to public criticism in the case of selling companies at below-market prices. "We plan to exclude bidders who won’t guarantee job security [for current Daewoo Electronics workers] or who are interested in short-term profits," said an official of the creditors. There were some bright spots for Daewoo Electronics last year: it gained the top spot in the television market in Poland and kept its No. 1 place in Vietnam’s refrigerator market for three years running. But overall sales have been gloomy; over the past five years, it has halved its employees to 5,000 and sold off non-core businesses such as microchip and defense-related operations. In 2005, Daewoo Electronics posted an operating loss of 74.8 billion won on sales of 2.16 trillion won, with the company saying the poor results were attributable to the South Korean currency’s rise against the U.S. dollar, driving up prices of South Korean products on the international market.
