South Korea may be a hot market for US law firms seeking to break new ground in Asia these days, but for several years its been a new legal quagmire for a Dallas-based private equity form that brought a controlling stake in one of the country’s biggest financial institutions for $1.5 billions in 2003.
Now that the private equity shop, Lone Star Funds, appears to be close to resolving its problems. The Lone Star reached a revised agreement this week to sell a 51 percent stake in Korea Exchange Bank, the largest foreign exchange bank is South Korea, to Hana Financial Group for $3.5 billion.
The announcement comes about a year after Lone Star and Hana first announced a deal under which the latter would acquire the former’s state in KEB, which was founded as a government-owned institution in 1967.
The initial agreement with Hana, which has actually been mored in legal and regulatory proceedings, came after Lone Star’s two previous attempts to unload KEB fell. The failed transactions include a potential $7.3 billion sale to South Korea’s KB Kookim Bank in late 2006 and a $6.3 billion sale to HSBC Holdings in late 2008.
According to The Wall Street Journal, to get the latest deal done, Lone Star agreed to slash the asking price for its KEB stake by 11 percent. Even at the discounted price, Lone Star stands to make a hefty profit from the sale of KEB.
Skadden, Arps, Slate, Meagher & Flom and South Korean firm Kim & Chang took the lead in advising Lone Star on its initial investment, with additional outside counsel provided by British from Simmons & Simmons and Australian firm Minter Ellison . (A new team of team of lawyers from Akin Gump Strauss Hauer & Feld, Bryan Cave, and South Korean firm Shin & Kim advised KEB on its sale to the Lone Star.)
A spokeswoman for Skadden, which represented Lone Star on a related disposition of a US -based KEB subsidiary, told The Am Law Daily in an e-mail on Friday that the firm had to role advising on the current sale of KEB to Hana. Representatives for the Magic Circle firms Allen & Overy and Linklates, which have advised on several other aborted transactions by Lone Star and by KEB, respectively, did not respond immediately to requests for comment on whether their firms were involved in the current deal.
Also, Kim & Chang did not immediately respond to a request for a comment on whether it continues to represent Lone Star, but Asia Legal Business reported last year that the private equity shop had retained the firm for counsel on the ultimately unsuccessful sales to Kookmin and KSBC, and on the proposed sale to Hana.