Creditors in troubled South Korean credit card company LG Card have reluctantly agreed to sell their stakes in the business through a public offering, although this might make finding a buyer harder and could drive down the price tag.
LG Card, which has a market value of $6 billion, was taken over by its creditors in 2004 when it found itself on the brink of collapse.
In recent weeks the owners had wanted to offload their stakes through a private sale. This would have involved the holders of 82% of the card issuer’s shares consolidating ownership to conform to local laws permitting a private sale.
The benefit of this would have come in avoiding the rigors of a public sale process and avoiding the regulatory necessity for the entire company to be sold, thus making LG Card more affordable prospect for potential buyers.
However, South Korean officials blocked the private sale plan, insisting that LG Card is sold in a public arena. While this is not what the major creditors wanted, they have now agreed to instigate a public sale.
Five bidders, including Standard Chartered and Shinhan Financial Group, are believed to be interested. However the ruling now requires potential buyers to issue a public tender offer for minority shareholders’ stakes.