Exchange Bank Union to Sue Lone Star

Korea Exchange Bank’s (KEB) labor union announced on April 6 that they will sue Lone Star in an attempt to retrieve 376.2 billion won from the U.S. fund.

The labor union accused Lone Star of raking in some 376.2 billion won in illegal transactions during the process of acquiring KEB, and has asked the bank to sue Lone Star in order to have the money returned.

If KEB does not file charges within 30 days, the labor union announced they will file a lawsuit against Lone Star by themselves.

“Lone Star issued 268.75 billion new shares to its subsidiary, LSF-KEB Holdings, in October 2003 at a discounted price of 1.075 trillion won, or 4,000 won per share; the regular price should have been 5,000 won per share,” the labor union said, adding, “Lone Star should return the extra money obtained from the margin.”

The labor union set the “fair price” at 5,400 won, the price paid by Lone Star when it bought shares from existing shareholders.

The labor union claimed, “Handing over new shares accompanying management rights to an off-shore fund is outrageous,” and mentioned that issuing shares at a discounted price was “an act of misappropriation.”

Jin-Young Hwang buddy@donga.com