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Lone Star begins cashing out

June 23,2007
Lone Star Funds yesterday sold Kukdong Engineering and Construction to Woongjin Holdings for 660 billion won ($711 million), just a day after it sold off a 13.6-percent stake in Korea Exchange Bank for an estimated 1.2 trillion won.
“Woongjin Holdings’ strategic focus and ability to accelerate Kukdong Engineering & Construction’s growth was a major factor in their selection,” said John Grayken, founder of the U.S.-based buyout firm, in an e-mailed statement. “As Kukdong has turned around, it is now time for a more strategic owner to step in.”
Woongjin Holdings said in a regulatory filing yesterday that it acquired a 98-percent stake in Kukdong from Lone Star. The investment fund took over Kukdong, which was then under court receivership, in 2003 for 170 billion won. Added to the 220 billion won in dividends it has earned so far, Lone Star will have earned 880 billion won through its purchase of the Korean builder, almost five times its original investment.
Separately, Hana Financial Group and Nonghyup, or the National Agricultural Cooperative Federation, on Thursday bought 3.3 million shares, worth 45 billion won, of the sales offering for Korea Exchange Bank, according to Credit Suisse Group, the investment bank arranging the sale.
Although the combined shares were slightly over one percent of Korea Exchange, the nation’s fifth-largest lender, both banks claim the purchase was simply meant as an investment. Industry insiders, however, say the two banks are interested in bidding for control of Korea Exchange.
Grayken said, “We are actively looking for a strategic investor who can take KEB to the next level.”
Seo Young-su, an analyst with Kium Securities, said Lone Star’s Korea Exchange share offering is aimed at bringing down the price to facilitate acquisition by a Korean lender. Following the sale, the U.S. private equity house will have a 51.02 percent stake in Korea Exchange.


By Seo Ji-eun Staff Writer [spring@joongang.co.kr]



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