Posted January. 29, 2009 07:03,
The government will sell its stakes in 18 companies to foreign investors through international bidding.
Chances are high that foreign capital will assume managerial control over several of the companies since majority stakes in them will be put up for sale.
The 18 include Hynix Semiconductor, Korea Plant Service & Engineering, New Seoul Country Club and the Busan Exhibition and Convention Center.
Senior government officials yesterday said the Knowledge Economy Ministry has picked 18 companies that could be sold to foreign capital in the first round of the governments sale in consultation with the Strategy and Finance Ministry, the Culture, Sports and Tourism Ministry, and the Land, Transport and Maritime Affairs Ministry.
The Knowledge Economy Ministry announced these and other measures in a briefing on a pan-government plan to expand foreign investment last week in a meeting chaired by President Lee Myung-bak.
The names of companies for sale were not disclosed to prevent a backlash.
The seven state-invested companies in which foreign investors can buy stakes, are Hynix; Korea Aerospace Industries; New Seoul Country Club, which was earmarked for privatization at the announcement of the first round of the plan on streamlining state-run companies in August last year; four state-run companies in which the government plans to only sell certain stakes, including the plant company and Incheon International Airport Corp.; and six in which government agencies hold stakes, including LG Powercomm and the Busan convention center.
The Financial Services Commission and the Strategy and Finance Ministry are in the process of selecting firms to be put up for international bidding among state-invested companies and those with investment from government agencies. Hence, the number of companies to be put up for international bidding to attract foreign capital to be finalized in the middle of next month will likely increase further.
The government had sought to sell state-run and state-invested companies to domestic capital in consideration of public sentiment and the potential impact of a foreign sale on the economy. The direction of the plan has shifted toward international competitive bidding, however, given the difficulty of finding buyers of large companies within Korea as show by the collapsed bid to sell Daewoo Shipbuilding and Marine Engineering.
Most analysts say domestic companies are unlikely to purchase stakes in the companies though they can bid, since conglomerates are set to refrain from making new investments as long as possible.
The government labeled the 18 entities companies for attracting foreign investment through mergers and acquisitions, but only certain portions of stakes in companies highly public in nature will be sold. Moreover, state agencies will maintain managerial control over them.
Hence, Seoul will sell less than 50 percent of stakes in companies directly related to national infrastructure, including the airport and the plant companies. No change will be made in managerial control over LG Powercomm, in which the government owns less than a 50-percent stake.