Corporate Resurrection
Pantech is being given a second chance at financial survival after being bought by a local tech consortium.
In a meeting of representatives from creditors and Pantech on Oct. 16, the Seoul Central District Court approved a revival plan of the consortium led by optical disc manufacturer Optis and telecommunications equipment maker Solid. Accordingly, the debt-ridden company finally seems to have found itself again, 14 months after it was placed under court receivership in Aug. last year.
Pantech was established by its founder Park Byeong-yeop as a small beeper company in 1991, and rapidly grew after entering the cell phone business in 1997. Starting with capital of 400 million won (US$353,000) and six employees, it was once the country’s third-largest handset maker after Samsung and LG. In the rapidly-changing cell phone market, however, Pantech reached the breaking point as other overseas smartphone companies entering the domestic market as well as Samsung and LG, collapsing the regional boundaries. The company, which used to boast sound sales in a market congested with global brands, was eventually left behind due to the limit of the capital strength.
Although Pantech introduced innovative technologies before conglomerates, such as fingerprint verification and metal antennas, the company fell behind in a marketing competition with them. As a result, Pantech finally filed for receivership in Aug. last year after it was put under two workout programs. Also, the sale wasn’t easy for the company. It carried out open sales to seek out a new owner in Sept. 2014, but not a single company wanted to bid for it. In the second attempt in Jan. this year, U.S.-based One Value Asset Management showed a strong desire to purchase Pantech, but the deal was ditched after the potential buyer failed to remit the payment on time. In the third attempt, three bidders submitted their letters of intent to the Seoul Central District Court, but all of them were rejected by the court for being poorly qualified. In the end, Pantech sought to give up court protection in May.
The future of Pantech, which was given a second chance, depends on smartphones and the Internet of Things in markets at home and in India. The company is highly likely to re-enter the domestic handset market with a new smartphone as early as the first half of next year. The consortium acquired the trademark rights of Pantech's major phone brand, the Vega series. It will also start transforming into an IoT firm. The consortium already announced its plan to make the IoT business its new growth engine.
In the high-end smartphone market, the company is planning to release products with communication modems by using advanced communications technology and innovative ideas, rather than a full-scale war with handset giants.
The main target market of Pantech will be the Southeast Asian markets, including Indonesia. Using Solid’s network in Indonesia, the company will focus on the Indonesian mobile market and IoT, based on low-end smartphones.
Still, Pantech faces bumpy roads. It is urgent to secure continuous operating funds right now. The catch here is whether or not the company will be able to secure sufficient funds through Smilegate Investment, which is considering investing in Pantech.
An official from the industry said, “Pantech, which has dramatically revived, will undergo some considerable changes in the future, including business models. Since it will take a long time to see the effects of the takeover, the question is how the company will hold out the beginning of the takeover.”