Banks Agree to Delay Pantech’s Debt

Banks have agreed to postpone the debt owed by Pantech Group, including Pantech and Pantech & Curitel, Korea’s third-largest mobile phone company. The postponement will be co-managed by banks holding Pantech Group bonds.

Following this decision, the Pantech Group, which is experiencing funding difficulties, will be allowed to postpone its debt redemption for up to three months.

The ten banks holding Pantech bonds, including the Korea Development Bank, held the “First Bond-holding Bank Self-regulation Council” meeting and reached an agreement on December 15 at the KDB main office at Yeouido-dong, Yeongdeungpo-gu, Seoul.

The banks will dispatch a capital manager to the Pantech Group early next week and begin inspections after selecting an accounting firm among the four major firms.

Depending on the results of this examination, a memorandum of understanding (MOU) will be signed regarding debt expiration extensions and interest rate adjustments, and financing turnover.

If this MOU is signed, the Pantech Group must begin restructuring operations under the management of the creditors.

The debts owed by the Pantech Group are: 564.6 billion won to banking organizations such as banks, 16.4 billion won to non-banking organizations such as mutual saving banks, 160.6 billion won in commercial paper (CP), and 655.5 billion won in corporate bonds for a total of 1.397 trillion won.

Of this amount, bank loans of 564.6 billion won will be granted debt redemption postponement as part of the initiation of the workout.

However, in order for the workout to be carried out successfully, the agreement should be obtained from both non-banking sector and CP and corporate bond holders.

The CPs and corporate funds issued by the Pantech Group are mostly owned by non-banking sector such as insurance companies, credit union associations and the Korean Federation of Community Credit Cooperatives. They may request redemption at any time.

Due to such circumstances, the Pantech Group has decided on the approach of individually persuading non-banking institutions and obtaining affirmation documents.

After this day’s decision, the Pantech Group said in a press release that “The workout decision of the banks will be an opportunity to revive Pantech, a competitive corporation. We will actively participate in the future actions of the bond-holding banks.”

Chairman Park Byung-yeop of the Pantech Group also said, “We appreciate the decision of the banks and will do our best to quickly overcome the current crisis.”