The Korea Development Bank (KDB) notified AFC Korea Co., a subsidiary of Chinese private equity fund (PEF) AFC, that it was selected as the preferred bidder for STX Corporation, according to investment banking industry sources on December 27.
AFC is a PEF which has offices in Beijing, Hong Kong and Seoul. Its holding company AFC Beijing is a Chinese PEF worth 3 trillion won (US$2.8 billion) invested by China’s state-run company and bank. In South Korea, CEO Hong Ra-jung established a domestic subsidiary in November last year and has been in charge of managing investment. He is raising 100 billion won (US$93.23 million) worth of project fund to acquire STX. More than half of the fund was financed by domestic mid-size companies and institutions as financial investors.
Earlier, the council of creditors of STX, including the KDB, decided to sell 15,237,051 common shares and 1,271,000 convertible shares, or 86.28 percent of the ownership including convertible shares, and carried out a binding bid on the 21st.
Four companies, such as Pan Ocean, a subsidiary of Harim Group, and clothing firm Global Sae-A, competed in the binding bid. However, AFC became the final winner by offering the highest price at 70 billion won (US$65.26 million). An official from the seller said, “AFC offered the highest price for stock values and it also has sound investors. The company was chosen because it proposed the way that can make the most surplus funds compared to its competitors when STX is to increase capital by issuing new stocks in the future.
STX, the former holding company of STX Group, is now a general trading company after restructuring. The company has to take care of its loans after the acquisition. STX announced that it will pay off 71.3 billion won (US$66.49 million) of non-agreed credits to be matured at the end of this year in its cash and has extended the maturity of 370 billion won (US$345.05 million) of agreed credits to the end of next year. The KDB is planning to begin negotiation with an AFC consortium, which was selected as the preferred bidder, on the conditions related to loans, including agreed credits.