South Korea Revives Woori Sale Process, Sets June Deadline for Fresh Bids

South Korea will begin accepting fresh bids for Woori Finance Holdings Co. tomorrow as the government tries to revive the sale of its 57 percent stake in the country’s largest financial company by assets.

Bidders should submit letters of interest by June 29 with offers to buy a minimum 30 percent stake, the Public Fund Oversight Committee said today. Woori Finance will be sold in a package with its units, the committee said in a statement.

State-run Korea Deposit Insurance Corp. aims to divest the stake, valued at about 6.3 trillion won ($5.8 billion) as President Lee Myung Bak sheds control of state-run companies to boost their global competitiveness. The plan follows the government’s suspended attempt in December to privatize Woori Finance amid a lack of buyer interest.

Woori shares fell 1.5 percent to 13,350 won at the 3:00 p.m. close of trading in Seoul, reversing earlier gains. They have tumbled 14 percent this year, compared with the Kospi Index’s 2.5 percent increase.

Final bids for Woori will be taken in September, Min Sang Kee, who heads the committee, told reporters today in Seoul. The committee is jointly run by the government’s Financial Services Commission and private experts including professors.

Luring Bidders

To lure more bidders, the government may consider easing rules requiring financial holding companies to own more than 95 percent after buying a peer, Shin Je Yoon, vice chairman of the Financial Services Commission, told reporters today.

State-run KDB Financial Group Inc. may seek to buy a stake in Woori Finance if the government eases the requirement, Yonhap News reported May 5. KDB Financial will talk with South Korean financial authorities about making a possible bid for Woori Finance, Park Chan Ho, a spokesman at KDB, said by phone today. Shin and Min declined to comment on a specific bidder.

The government is also trying to privatize KDB and aims to sell an unspecified number of shares by May 2014.

“The key concern is whether there will be bidders other than KDB and the outlook isn’t bright,” said Hyun Shim, a banking analyst at KB Investment & Securities Co., who has a “buy” rating on Woori.

Hana Financial Group Inc. Chairman Kim Seung Yu, who’s seeking to extend a 4.7 trillion won bid to buy Korea Exchange Bank from Dallas-based Lone Star Funds, said on May 12 that he wasn’t considering acquiring Woori Finance if his attempt to buy Korea Exchange Bank fails.

KB Financial Group Inc. Chairman Euh Yoon Dae said on May 11 that the owner of South Korea’s largest lender won’t bid for Woori Finance.

‘Last Resort’

Financial Services Commission Chairman Kim Seok Dong had said the country may reorganize roles of state-run financial companies to better support South Korean companies in overseas infrastructure projects.

“Combining KDB with Woori may be the last resort for the government as it fails to find a buyer at all,” said Choi Jung Wook, a banking analyst at Daishin Securities Co. “That’s far from the government’s earlier stance of making financial companies more competitive through privatization.”

Woori Finance had total assets of 346 trillion won at the end of March and operates three banks including Woori Bank, the country’s second biggest. It also runs a securities unit Woori Investment & Securities Co. as well as asset management and private equity units.

The company was created in 2001 as a holding company for banks that the government rescued following the Asian financial crisis in 1997 to 1998. The government spent 12.8 trillion won to aid Woori Finance and has recouped 5.3 trillion won so far though block sales of shares.

JPMorgan Chase & Co. (JPM), 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: Bomi Lim in Seoul at blim30@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg in Hong Kong at phirschberg@bloomberg.net

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