KAMCO to Penalize Wrongdoers
in Selling Restructured Firms
Discloses the terms of selecting preferred bidders of Daewoo E&C and others

Korea Asset Management Corp. (KAMCO) has decided to penalize the companies found to have committed illegal accounting frauds and other wrongdoings in the process of selling restructured companies who have underwent restructuring since the Asian financial crisis.
In a news conference at the Korea Federation of Banks on April 13, KAMCO Chairman Kim Woo-suk announced the specifics on the terms of disposing of its equities of the companies that were forced to restructuring due to financial woes. "Companies that have caused such social troubles as accounting frauds, stock manipulation, and tax evasions will be faced with burdens corresponding to the illegal activities"he said.
Companies convicted of illegal activities within the recent five years or on trial after being indicted by the prosecution will have their marks deducted by up to 10 points out of the possible 100 points in the course of selection of preferred bidders, KAMCO Chairman Kim said. As a result, Doosan and Hanwha business groups would be unfavorable among the six applicants who bid for acquiring Daewoo E&C, which is put on the block. Ex-Doosan chairmen Park Yong-oh and Park Yong-sung were given suspended prison terms by a lower court on conviction of raising 28.6 billion won in slush funds and misappropriating them. Hanwha Chairman Kim Seung-youn was fined by the appellate court on conviction of delivering 1 billion won to Suh Chung-won, former chairman of the opposition Grand National Party illegally during a presidential election.
Even though they have their marks deducted by 10 points, however, the disadvantaged firms would become preferred bidders in the case they raise their bidding price by 15 percent, he said. KAMCO said the company will also ask similar punitive points in the course of the sale of companies in which KAMCO has equities, but not in charge of disposing of them.
KAMCO, an organization specialized in restructuring financially troubled firms, is in charge of the sale of Daewoo Engineering &Construction, Daewoo International and SsangYong Engineering & Construction with the combined value of the assets standing at 8,561.2 billion won. KAMCO also has equities in seven other companies - 19.1 percent interest in DSME, 9.3 percent share in Ssangyong Cement, 5.7 percent in Saehan, 3.0 percent in NPS, 57.6percent in Daewoo Electronics, 36.3 percent in Daewoo Precision and 13.7 percent in Saehan Media.
KAMCO says the bid price will account for 67 to 75 points of the total, with non-price factors like capital-raising capability ranging from 25 to 33 points. The KAMCO-led joint sales committee for the construction firm, comprising of nine financial institutions, will resume a preliminary due diligence soon and select a preferred bidder between the end of May and mid-June, Kim said.
Citigroup Global Markets and Samsung Securities are jointly managing the sale. Daewoo E&C has posted profits since it was graduated from a work-out program in 2003.
Commenting on fears that the terms of selling Daewoo E&C may have determined under the influence of the trade union of the construction company, a KAMCO spokesman said the specifics have never been set at the request of Daewoo E&C trade union, but determined in consideration of such factors as trade unions of bidders, minority shareholders, management, subcontractors and credit banks and civic organizations whose opposition could hinder a sell-off. nw

KAMCO Chairman Kim Woo-suk announces the terms of the sale of restructured companies.