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Hanaro board asks for more time to consider foreign investment

25 Jun 2003

Officials at South Korea’s Hanaro Telecom revealed yesterday that the operator’s management board is divided over whether to sell a 40% in the company to an investment group led by the world’s biggest insurance company, AIG, for USD1 billion. Whilst some board members are keen to accept the deal, which would rank as the largest ever foreign investment in South Korea, others apparently feel the sum offered, which equates to around KRW3,000 (USD2.5) per share, undervalues the firm. Hanaro desperately needs a financial injection in order to ramp up its service offering in South Korea’s increasingly competitive broadband internet market, which is approaching saturation. Hanaro currently controls around 30% of the market for high-speed internet services behind KT Corp, which has a market share approaching 50%. Hanaro also needs to reduce its debt burden, which stands at around USD1.85 billion, more than double its market value. The Hanaro board is planning to discuss the deal again at a board meeting on 3 July, with a shareholder meeting scheduled for 23 August.

South Korea

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