Cell Phone Maker Gets Loan Reprieve

Creditor banks of the Pantech Group (Pantech) are reportedly carrying out measures to jointly restructure the loans of Pantech Co. and Pantech & Curitel Communications, the third largest mobile phone maker in Korea.

On December 11, twelve banks carrying Pantech’s shares agreed upon words and decided to sign a written agreement to put the group under ‘workout’ plan. Creditors would help Pantech—which is short of funds- pay back loans by restructuring the terms of the loan or the time of repayment rather than proceeding with foreclosure.

For its part, Pantech held a board meeting on the same day and officially asked creditors to pursue the workout plan.

All twelve banks should agree on loan restructuring to start the workout project.

According to a phone survey done by this paper on the same day, seven creditors (Korea Development Bank, Woori Bank, Korea Exchange Bank, Shinhan Bank, Kookmin Bank, Daegu Bank, and National Agricultural Cooperative Federation) among twelve creditors said they agree with the rescheduling of Pantech loans.

Hana Bank, Industrial Bank of Korea, Kwangju Bank, and Export-Import Bank said they haven’t decided yet, but answered positively, while China Construction Bank, a sole foreign creditor, declined to give an answer.

“As all creditor banks expressed their principle agreement on carrying out workout program at the working level meeting on December 8, chances are high that they will reach a written agreement,” said one official of a creditor bank.

Pantech group is known to have been under heavy financial pressure this year due to intensified competition in the mobile phone industry and declined performance.

legman@donga.com sanhkim@donga.com