Hanaro Telecom to Newbridge-AIG consortium

Management rights of Hanaro Telecom have been taken over by Newbridge-AIG consortium.

Hanaro Telecom’s extraordinary general meeting of shareholders at its head office in Ilsan, Goyang, Geonggi Province passed the proposed resolution to attract foreign capital with a 75 percent approval (175,188,041 shares) of the total current shares (240,311,801 shares). The approval rate to the number of total issued shares was 63.9 percent, which made it eligible under the approval conditions that approved shares must represent at least two thirds of the total current shares, and one third of the total issued shares.

Newbridge-AIG consortium will pay Hanaro Telecom $500 million (approximately 590 billion won) for the purchase of new shares until October 31. JP Morgan’s syndicate loan of $600 million (approximately 700 billion won) is also to be paid to Hanaro Telecom, enabling the company to temporarily settle liquidation problems and lower its liability rate to 110 percent from a previous 156 percent.

Newbridge-AIG consortium’s shareholding of 39.6 percent and five board directors out of Hanaro’s total 11 has made it the major shareholder. Newbridge-AIG consortium’s increase in shareholdings brought a decrease in other company’s shareholdings: LG Group holding 10.69 percent from its previous 18.03 percent, and Samsung Group and SK Group 5.5 percent from 8.49 percent, and 3.3 percent from 5.1 percent respectively.

Hanaro Telecom now plans to carry out businesses in new sectors such as the mobile-internet service, with hopes to undergo restructuring of the telecommunication market by taking over Thrunet before the end of this year. In the long run, Hanaro Telecom also prospects a take over of Dacom.

Meanwhile, after the extraordinary shareholders’ meeting, LG Group said, “It’s a shame that Hanaro Telecom, South Korea’s key internet service provider, had to be taken over by a foreign group and at such a low share price,” and that “we would like to reexamine the power of attorney and the extraordinary shareholders’ meeting, and consider taking legal steps.”

Seong-Yub Ra cpu@donga.com