Local and Foreign Creditors of SK Global Reach Agreement

Negotiations between local and overseas lenders of SK Global came to a settlement, putting an end to the four-month-long battle.

The local creditors of the beleaguered trading company said Wednesday that they reached an agreement with their foreign counterparts to set the CBO (cash buy-out) rate at 43 percent, at a negotiation table in Hong Kong on July 29.

Accordingly, the local lenders will provide cash for 43 percent of all offshore lenders` bonds.

Foreign lenders held a meeting with all the creditors in Hong Kong, informing each financial institution of the agreement. They plan to decide by August 12 whether each creditor bank will participate in the move. The 43 percent CBO rate was derived by domestic lenders and is based on the liquidation value of both headquarters and overseas companies of SK Global. Offshore lenders had originally demanded 72 percent or higher.

In return for accepting the 43 percent CBO rate, overseas creditors will receive a bond with warrant (BW), which gives the right to the holder to purchase a fixed amount of new shares at a pre-specified exercise price, in accordance with the participation of foreign banks.

Now that there is a settlement, SK Global can pursue ways in which to come under control of the banks instead of being under court receivership.

The issue over SK Chairman`s Chey Tae-won`s stock shares and his sale of the Sheraton Walkerhill hotel will be pushed for, as initially planned by the SK group and creditor banks.

Chi-Young Shin higgledy@donga.com