Pantech rescued by new takeoverOnce on the verge of going out of business, Pantech, the third-largest smartphone maker, has received another chance.
A consortium led by optical disc manufacturer Optis and telecommunications equipment maker Solid signed an official contract Friday to take over the debt-ridden company.
Multiple local media outlets estimated the agreed selling price is 40 billion won ($ 34.7 million).
The consortium will make the payment in September and a group of creditors and representative shareholders are expected to grant approval the same month.
The move came after the Seoul Central District Court approved the consortium’s bid in June to acquire Pantech that had gone through court receivership and a series of failed sales attempt.
At the signing ceremony on Friday, Byeon Yang-kyoon, chairman of Optis and the new chairman of Pantech, emphasized a shift away from the local market and into emerging markets in countries like Indonesia.
“Tying Pantech and us [Optis and Solid] together, we will jump into Indonesia,” said the chairman.
In 2011 and 2012, the company bet on expensive premium smartphones, setting the price of its Vega Racer series similar to Samsung’s flagship Galaxy devices.
However, the smartphone manufacturer failed to take a significant share of the market as Apple and Samsung Electronics dominated with superior designs and software, as well as better customer service.
Lee Ju-hyung, founder and CEO of Optis, made it clear that he hopes to shift the business focus of Pantech toward selling budget smartphones in developing Asian countries.
The appointment of the new chairman also hinted at the change in business focus as Byeon, a former presidential aide, has run an IPTV business in Indonesia.
Byeon also emphasized the symbolic importance of Pantech as a rare example of success by a small startup company in a country where family-run chaebol dominate the economy.
“The dream of Pantech is synonymous with the dream of Korea,” he said. “I will revive Pantech.”
Byeon was chief secretary of national policy in the Roh Moo-hyun administration before he resigned in 2007 after having an affair with a museum curator. Since then, he has kept a low profile.
The consortium and Pantech are still in talks about employment issues and the details of properties that will be acquired.
The buyers reportedly want to retain only 400 employees out of the more than 1000 that currently work for Pantech.
Despite potential sticking points, the deal is expected to go smoothly as Solid, the largest telecom device maker, has joined the consortium.
The supplier to major telecom operators SK Telecom and KT announced Friday it will invest 6 billion won in the purchase.
“Solid has made efforts to break into the Southeast Asia market with a focus on Indonesia,” the company said in a regulatory filing, “The decision [to participate in the consortium] is based on a strategic reasoning that the purchase can help Solid enter the regional market and create synergies.”
“In cooperation with Optis, we will submit a plan to revive Pantech to the court and then undergo the meeting with creditors to finalize the purchase.”
Built in 1998, Solid generated 183 billion won in sales and 16.5 billion won in operating profit last year.
Along with Solid and Optis, also part of the consortium is EMP Infra Asia, an investment management company.
This is the fourth attempt to sell the tech company after bidders including a U.S. equity fund withdrew from the bidding.
BY PARK EUN-JEE [email@example.com]