Kookmin to buy KEB but withhold payment

Korean bank Kookmin has agreed to purchase a controlling stake in Korea Exchange Bank, but will not be paying for it until prosecutors’ investigations into vendor Lone Star are completed.

Texan private equity investor Lone Star has signed an agreement to sell its controversial 50.5 percent controlling interest in Korea Exchange Bank (KEB) to Kookmin Bank.

The transaction will be worth up to 6.9 trillion Korean won ($7.3 billion; €5.75 billion), according to a report in English-language Korean newspaper JyoongAng Daily.

However, Lone Star also said that it “will not rush” the completion of the deal until Korean prosecutors are done with their ongoing investigation of the firm and its investment in KEB.

In a brief statement, Lone Star noted that “Kookmin Bank will not make the payment for the sale until the prosecutors’ investigations as well as the government’s approval process [are] completed.”

Previously, Lone Star had been portrayed in some press reports as wanting to swiftly complete the KEB stake sale in order to beat an end-of-June deadline for a new tax law that may impose a tax on the multi-billion profit it stands to gain from the transaction.

The announcement comes on the heels of an approval on May 19 by the board of directors at Kookmin Bank to purchase the Lone Star holding in KEB, a Lone Star spokesperson told PEO.

JyoongAng Daily reported that Kookmin has negotiated the purchase price down to 15,200 won a share from the 15,400 won a share figure announced in March, following a two-month inspection of the bank’s books. The Lone Star spokesperson declined on comment on the change in price.