Hanaro takes back ring in Thrunet courtship

Hanaro Telecom Inc., Korea's second-largest high speed Internet service provider, said yesterday that it has called off plans to take over its smaller rival Korea Thrunet Co. Hanaro said that it notified eight shareholders in Thrunet, including the largest shareholder Trigem Computer Inc., of the cancellation of the contract. "We concluded after a due diligence that we need larger short-term capital to take over Thrunet than we initially thought," Jo Yeong-wan, a vice executive at Hanaro, said. Hanaro had sent more than 30 officials, including accountants and lawyers, to Thrunet and for more than two weeks conducted an examination on the financial status of the company. When Hanaro decided to give up Thrunet, Hanaro's plan to raise foreign capital was also called off, Mr. Jo said. Hanaro has pursued attracting up to $1.4 billion in foreign capital on the premise that the company take over Thrunet. Hanaro will shift its business plan for the year to improving efficiency in inside management and working to end the year with a focus on profits. Hanaro said that such a cancellation is guaranteed in the contract, so there is no legal problem. On Dec. 30, Hanaro signed a contract with eight stakeholders in Thrunet to purchase 72 percent in Thrunet for 126 billion won ($107 million). Thrunet and Trigem regretted Hanaro's decision to cancel the deal, criticizing Hanaro for "violating basic business morals." "We would like to express deep regret over Hanaro's unilateral cancellation of the contract," an official from Thrunet said. "We will come up with plans to stand on our own feet," the official added. "Such a move by Hanaro will not just hamper the development of the high speed Internet business in Korea, but it will dampen the overseas credibility of Korean companies," a Trigem official said. On the Kosdaq market, Hanaro ended the day down 0.3 percent to 3,290 won. by Kim Jong-yoon