Lone Star eyes selling Korea Exchange Bank stake

Buyout fund restarts attempt to dislodge 51% share in KEB despite pending appeal at Supreme Court.

Korea Exchange Bank said Wednesday its biggest shareholder, private equity group Lone Star Funds, is renewing efforts to sell its majority stake in a prospective deal that has long been hampered by legal and political constraints.

The US-based buyout fund took over Korea Exchange Bank in late 2003 when it was in financial trouble by purchasing a majority stake for about 1.4 trillion won ($1.2 billion).

Lone Star, however, has been blocked from unloading its stake amid long-running allegations of shady dealings when it acquired KEB, one of South Korea's five biggest lenders.

A local appeals court in late December cleared a former finance ministry official and a former KEB chief of charges they helped Lone Star buy KEB for a bargain price by conspiring to understate the lender's value.

Prosecutors, however, appealed the ruling, which is now pending at the Supreme Court.

KEB chief executive Larry Klane told the bank's board Wednesday that Lone Star would make another attempt to sell the lender, said bank spokeswoman Kwon Sang-mi.

View the full story in Business Week.