Kiswire Ltd, a Kospi-listed South Korean industrial wire maker, will take over Hanil Engineering & Construction Co. (Hanil E&C) under court protection, scoring the country’s first purchase through a stalking-horse bidding process.
According to investment bank industry sources on Thursday, a Seoul court handling sale of Hanil E&C chose a consortium led by Kiswire as the preferred bidder to acquire the builder. The court earlier picked the Kiswire consortium as the initial bidder in a stalking-horse bidding procedure.
In a stalking-horse bid, a distressed company chooses an interested buyer to prevent bidders from low-balling the purchase price. The stalking horse picked by the company and approved by the court is often given the priority rights over the sale.
After the Kiswire consortium was named as the stalking horse, two additional interested bidders, Samra Midas (SM) Group and Seiwoon Construction Co., participated in the main auction that took place on August 4. SM Group was said to have offered nearly 20 billion won ($17.4 million), which was 10 billion won or more than the initial offer of Kiswire, and emerged as the lead bidder.
But later the Kiswire exercised its priority rights given to a stalking horse bidder to raise its bid to more than 20 billion won and was finally named as the preferred bidder.
According to the bankruptcy court, it was Korea’s first case that a stalking horse bidder won an auction.
Hanil E&C is a mid-sized construction company established in 1970. It applied for court revival program at the Seoul bankruptcy court in March this year due to a liquidity crisis.
Shares of Kiswire finished Friday at 38,750 won, down 450 won or 1.15 percent from the previous session.
By Yoo Tae-yang
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]