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Banks agree to debt plan for Pantech

Cash-strapped smartphone maker Pantech is expected to go through a debt workout program instead of court receivership, giving the country’s smallest industry player the opportunity to get back on stable financial ground.

According to Pantech creditors yesterday, creditor banks including Woori and Nonghyup informed Korea Development Bank, the main creditor, that they agreed to the latest normalization plan to get Pantech back on its feet. The three creditors are owed more than 75 percent of total debts owed by Pantech, which is enough to allow them to approve the workout plan.

The official notice of the latest plan for Pantech’s debt restructuring agreed on by the main creditors will be sent to each of the creditor institutions and the three mobile carriers in the days to come.

The move comes after Pantech, which owes 180 billion won ($174 million) to Korea’s three mobile carriers (SK Telecom, KT and LG U+) asked for a debt-to-equity swap, last month. It owes 90 billion won to SKT, 50 billion won to KT and 40 billion won to LG U+.

It promised the three carriers that it will recover in the near future based on exports. Pantech is the maker of the Vega Iron smartphone and in recent years it has been suffering in the Korean market, where the mobile phone industry is dominated by Samsung Electronics and LG Electronics.

However, the three mobile carriers, declined the request but decided to extend the grace period for two more years.

The KDB then submitted the plan for debt settlement.

BY KIM EUN-JI [eunjik@joongang.co.kr]