Return to Workout Program
Pantech, the country’s No. 3 handset maker, has been instructed to enter a debt workout program for the second time since its first one in Dec. 2011.
According to the main creditor Korea Development Bank (KDB), over 75% of creditors approved a workout program at a meeting held at the KDB headquarters building in Yeoido, Seoul at 3pm on March 5.
On the same day, Pantech welcomed the move that could pave the way for its normalization.
Last week, Pantech submitted a debt workout plan to its creditors amid a poor cash flow for the second time in a little over two years.
Pantech started out as a small pager manufacturer and enjoyed early success as a handset maker, trailing behind Samsung Electronics and LG Electronics in terms of market share.
However, its shares were delisted in 2007 as debts increased and the acquisition of a local handset maker resulted in losses, which put the company under a five-year debt rescheduling program in 2007.
The company was released in December 2011 from its five-year debt workout program, under which its creditors injected massive amounts of cash.
Pantech overtook LG Electronics in 2010 to become the country’s #2 smartphone maker, thanks to strong sales of its Vega smartphone lineup. But its financial footing has gotten weaker of late, as it struggled with falling sales from increased competition in the high-end smartphone market dominated by two bigger local rivals and Apple.
Its sales dropped 40 percent year-on-year to 1.07 trillion won (US$998 million) in the first nine months of last year, and the company suffered an operating loss of 245 billion won (US$230 million).
Last year, Pantech secured 80 billion won (US$75.2 million) in fresh capital. KDB-led creditors also injected some 160 billion won (US$150 million) in cash into the company.
Pantech accounts for around 10 percent of the local market, with top player Samsung Electronics and its smaller rival LG Electronics taking up some 60 percent and 15 percent, respectively.