Buyer comes forward for Pantech

Smartphone maker Pantech, a debt-ridden company with two feet in the grave, has a chance to be resurrected as a court approved a local consortium’s bid to acquire the company.

The Seoul Central District Court announced Tuesday that a consortium led by Optis, a local optical disc drive manufacturer, has signed a memorandum of understanding with Pantech. Also part of the consortium is EMP Infra Asia, an investment management company.

Under the agreement, the two sides are scheduled to sign an official contract by July 17.

The surprise announcement came after Pantech asked the court to end a search for a buyer last month, following a series of failed attempts. Pantech was put up for sale after it went into court receivership last year due to snowballing debts amounting to over 1 trillion won ($894 million) as of the first quarter.

As the court was preparing to end the court receivership and officially begin liquidation procedures, the consortium expressed its intention to buy the smartphone manufacturer.

Pantech’s parabolic form gains notice from both the public as well as industry players because it was a rare case of a small Korean start-up almost succeeding in competition against the chaebol in a cutting edge product, mobile phones.

Established in 2005, Optis was founded by Lee Ju-hyung, whose career was built around Samsung Electronics before he set up his own company.

The founder and CEO said on Wednesday in an interview with local media that the consortium will shift Pantech’s focus to low-priced smartphones and the Internet of Things.

Lee also vowed to streamline business operations of Pantech since Optis is not buying Pantech’s factory or service centers.

But the potential buyer will reportedly hire part of Pantech’s workforce.

According to the company’s official webpage, Optis supplies core parts for optical disc drives and camera module parts, with its headquarters is in Suwon, Gyeonggi.

The company is a mid-sized manufacturer with healthy financial records. The company posted 599.6 billion won in sales last year and 15.07 billion won in operating profits. Optis has been bullish on buying small businesses recently. In 2012, it bought Samsung Electronics’ assembly line producing optical disc drive in the Philippines. It bought a 49.9 percent stake last year in Toshiba Samsung Storage Technology, a joint venture of Toshiba and Samsung Electronics.

Still, it remains to be seen whether the preliminary agreement will develop into a full-fledged deal.

The two sides must agree on the prices.

Samjong KPMG estimates that Pantech’s standing value is 110 billion won, smaller than the estimated liquidation value of 150.5 billion won.

But since Optis wants to buy only a part of Pantech’s businesses, it will likely offer a lower bid.

The apparent attempt to absorb some of Pantech’s workers could also become a sticking point. Pantech employs around 1,800 workers and 70 percent are researchers.

Pantech came close to being purchased by a U.S.-based consortium led by equity investor One Value Asset Management, but the deal was cancelled earlier this year after the potential buyer failed to remit a payment on time.

Established in 1991, Pantech was once Korea’s No. 2 mobile phone maker at its peak, beating out LG Electronics.

But when the tech industry entered the smartphone era, it fell behind local competitors Samsung Electronics and LG Electronics and eventually collapsed after a series of acquisitions.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]