Woori Finance Employee Group to Submit Bid for S. Korean Government Stake

Woori Finance Holdings Co. employees plan to submit a preliminary bid for the company today as the South Korean government tries to sell a stake in the nation’s largest financial company by assets.

“We’ll bid for entire the 57 percent stake, including Kyungnam and Kwangju Bank units,” said Kim Hong Dall, a managing director at Woori Finance, said in a phone interview from Seoul. Today is the deadline for investors to officially express bidding interest for the government’s holding.

State-run Korea Deposit Insurance Corp., Woori’s largest shareholder, plans to sell its stake as South Korean President Lee Myung Bak privatizes companies to make them more competitive. Hana Financial Group Inc., which earlier showed an interest in Woori, dropped its bid yesterday and agreed to buy a controlling stake in Korea Exchange Bank from Lone Star Funds, prompting speculation that Woori’s sale may be delayed.

“After the most likely candidate, Hana, turned to KEB, I think this round of bidding may not proceed well,” said Lee Chang Wook, a banking analyst at Taurus Investment & Securities Co. in Seoul. “The whole privatization plan is likely to be adrift for while.”

Woori fell 0.7 percent to 14,350 won at the 3 p.m. close in Seoul, valuing the government’s stake at about 6.6 trillion won ($5.7 billion).

Looking for Partners

The employees’ group, led by Kim, is talking to domestic and overseas investors to help fund an offer, he said without identifying them. “We’ve secured enough investors for the purchase even if the stock price goes up,” he said.

KT Corp., South Korea’s largest phone company, is considering joining the group’s bid, KT spokesman Lee In Won said by phone today. Posco, the nation’s largest steelmaker, may also join, according to spokesman Chung Jae Woong.

The Carlyle Group, the world’s second-largest private- equity firm, has submitted a competing bid for Woori, Korean- language online newspaper MoneyToday reported today without saying where it got the information. Dorothy Lee, a spokeswoman for Carlyle, declined to comment.

The actual size of the Woori Finance stake to be sold will be determined later and parties interested in Woori’s Kyongnam Bank and Kwangju Bank units must bid for more than 50 percent of the provincial lenders’ shares or merge with them, the Korea Deposit said on Oct. 29.

Shortlist

The Financial Services Commission, South Korea’s financial regulator which is leading the sale, said on Oct. 11 it aims to have a shortlist of bidders for the government’s stake by the end of the year and name a preferred bidder in the first quarter of 2011. Woori’s Kyongnam Bank and Kwangju Bank units may be sold separately, the FSC said in July.

Investors who express interest in buying the stake will be required to submit a more detailed proposal by year-end, FSC spokesman Ernst Lee said.

Woori Finance was created in 2001 as a holding company for banks that the government rescued following the Asian financial crisis in 1997 and 1998, when South Korea received a $57 billion bailout from the International Monetary Fund. The government spent 12.8 trillion won to aid Woori and has recouped 5.3 trillion won so far though block sales of shares.

JPMorgan Chase & Co., Samsung Securities Co. and Daewoo Securities Co. were hired in September to help Korea Deposit sell its stake.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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