Teachers Federal Credit Union
December 16, 2010 by staff
Teachers Federal Credit Union, South Korean officials are reviewing plans for the sale of a stake currently worth? 6640000000000 ($ 5.73 billion) in Woori Finance Holdings Co., signaling that the agreement to control the giant loan may be in difficulty.
An official of the Board of Control of public funds, overseeing the sales process Woori, said the committee aims to reach a decision quickly, but gave no specific timeframe. Committee members were unofficially informed of the situation, and it is planned to hold a formal meeting in the near future, the official said.
The government’s efforts to sell all or most of its 57% interest in Woori, South Korea’s largest financial holding company by assets, have been in freefall since Monday, when two consortia that had expressed interest for participation declined, citing the high premium sought by the Government for actions.
Consortia, one led by Woori employees and other customers including Woori large accounts, were considered front runners among the 11 parties which in November submitted letters of intent to bid for participation. Foreign companies were also involved. First round bids were originally due on December 20, with the map to select a preferred bidder in the first quarter of 2011.
The head of the committee declined to elaborate on possible alternatives for the committee to consider. But someanlysts say the government may choose to abandon the sale process altogether, given the doubts whether the bids fairly firm appear in the current circumstances.
Seoul has been to find a challenge to privatize the company in the midst of a complex regulatory environment that imposes strong restrictions on ownership in the financial sector.
The existing rules, it is difficult for one company to buy all the current actions of government, which explains why manyanlysts said earlier this year, a merger between Woori and one of his rivals may be the most likely scenario, in any divestiture success.
South Korea Hana Financial Group Inc., an early potential bidder who refused to continue the game in favor of an agreement with Korea Exchange Bank, “was essentially the only potential bidder for some time. No Hana in the race, he no other party who may acquire real Woori Finance & Marketing, Shinhan Investmentanlyst Joanne Lee said. “The government will probably be reluctant to sell to a foreign investor or a private equity … So I think the matter may end up being turned off.”
Ms. Lee said that the current administration may have enough time to complete the transaction, with President Lee Myung-bak nearly three years in his five years in office. In the absence of a significant development by mid-2011, she said that the sale wills probably Woori transmitted to the next administration.
Analysts said a possible bid for government involvement Woori probably involves a consortium of financial investors, making it difficult for Seoul to command a high premium for the shares.
The government has refused to name the companies who have officially expressed their interest in participating Woori, but Military Mutual Aid Association, Korea Teachers Pension, Investus Global, a private holding company, and Vogo Fund, a South Korean capital investment, said they have submitted letters of intent. People familiar with the situation said that the Union Korean Teachers Credit Union and Australia-based Macquarie Group Ltd. also submitted letters of intent.
Vogo Fund announced Thursday that it intended to bid for a controlling stake in Woori Finance as the government continues to sell. It is unclear whether another party will emerge.
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