Bidding process in sale of bulk carrier draws ire

The potential sale of the Korea Line Corp., the nation’s second-largest bulk carrier that is under court receivership, is under fire after the preferred bidder selection last week.

The Korea Shipowners Association yesterday said that the process of selecting a preferred bidder for the merger and acquisition of KLC has created controversy after Samil Accounting Corp., which is supervising the sale process, favored one company.

“For the M&A of a company under court receivership, fairness is the most important aspect, so Samil Accounting should explain clearly about the process and who is responsible for the issue,” the KSA said in a release.

Seoul Central District Court on Wednesday approved KLC caretaker’s request to appoint Samla Midas Group (SM Group) as the preferred bidder of the acquisition. It approved Polaris Shipping as the second choice, followed by Daelim Corp.

However, according to the KSA, Polaris and Daelim are set to file lawsuits to suspend the merger and acquisition process of KLC, while asking punishment for Samil Accounting’s error.

According to the two companies, they asked Samil Accounting whether the acquisition could be done through purchasing bonds with warrants or convertible bonds, but the accounting firm denied their request, saying that it could hurt the stock value.

However, according to the two bidders, Samil accepted SM Group’s initial proposal, which included purchasing bonds with warrants. Although SM Group’s proposal was denied by the court, it later revised the proposal to purchase corporate bonds and grabbed the preferred bidder’s position, according to Polaris and Daelim.

Samil Accounting said that there seems to be an “error in communication,” but the KSA said that the incident should be examined to verify whether there was wrongdoing in the preferred bidder selection process.

The KSA stressed that the process of selecting a preferred bidder should be corrected, and criticized SM Group for its lack of experience with maritime shipping.

“We have seen many examples that buyers that lacks experience or a relationship with the purchased company’s business damaging the nation’s economy after poorly managing firms under court receivership,” the business group for shippers said.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]