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Hanhwa Gave up Taking over Daeseng

Posted May. 28, 2002 09:07,   


The open bid for Daehan Life Insurance faces a failure. The only bidder Hanhwa group announced, “we will give up our bid if the government and the Public Fund Oversight Committee change the evaluation standard again or re-evaluate the criteria for the purchase.”

However, PFOC insisted moving forward by the original plan, expressing that it had no intention to accept the request of Hanhwa. Hanhwa and the Korean Deposit Insurance Corporation agreed to evaluate Daehan Life Insurance for 1 trillion 100 billion won at the time of September last year.

If this third bid failed, a new owner of Daehan Life Insurance is likely to be decided by the next administration.

Hanhwa, We Won`t Be Led By the Government: Park Jong-Seok, CEO and vice President of Hanhwa, announced on 27th, “you cannot find twice changes of evaluation standards for a competitive bid in the international market. We will give up our bid if we cannot not reach an agreement on major issues and the price by the end of June.”

Mr. Park also added, “review on the qualification must have been completed before the letter of intention was submitted. It is absurd to review the qualification again after even the price is agreed.” He also hinted filing a lawsuit, saying “if the bid is cancelled, we will request for compensations for our financial and metal damages.”

Hanhwa is suspecting that the government and PFOC have intention to sell Daehan Life Insurance to Hanhwa, judging that the government is delaying since it has no intention to sell.

Hanhwa had revealed it plan to restructure the group centered on finance, distribution, and leisure industry after it purchase Daehan Life Insurance but the plan will undergo a big shift if the bid failed.

PFOC Refuses To Accept the Request of Hanhwa: Yoo Jae-Han, executive director of PFOC, reiterated that it would go on with the original plan. PFOC will change the evaluation standard to the end of March since the business performance has recovered during past 6 months and it will re-evaluate the qualification of the Hanhwa as a purchaser all over again.

The government and PFOC disagree here. The Financial Supervisory Commission judges that Hanhwa completed its legal responsibility by purchasing low interest bonds of 130 billion won. However, PFOC insists that ‘it has to consider the moral responsibility of Hanhwa as well as the legal responsibility. Especially the revealed window dressing settlement must be considered.’ Sales Review Sub-committee under PFOC submitted already that Hanhwa is not qualified to purchase Daehan. Most financial experts believe that the bid is already over since the gaps between Hanhwa and the PFOC are hardly to be narrowed.

Do-Young Kim nirvana1@donga.com