Daewoo creditors set to give 'final' nod to Videocon
Creditors of the ailing Korean durables firm, Daewoo Electronics are likely to authorise the Seoul-headquartered Woori Bank, a member of the lenders’ consortium, to sign the final documentation with the Videocon-led consortium on May 4.
By TNN |
MUMBAI: Creditors of the ailing Korean durables firm, Daewoo Electronics are likely to authorise the Seoul-headquartered Woori Bank, a member of the lenders’ consortium, to sign the final documentation with the Videocon-led consortium on May 4.
The parties have narrowed down their differences during the month-long negotiations, resulting in the Videocon-led consortium agreeing to certain key issues. The creditors have agreed to a price of around 700 billion Korean won, taking the total enterprise value to $1 billion, sources said.
They expect to complete the documentation in six to eight weeks. Videocon officials refused to comment on the development. The company had earlier threatened to abandon the bid after failing to get the 40-odd Daewoo creditors to arrive at a mutually agreeable financial deal, sources said.
While they are yet to arrive at an unanimous decision, the absence of a second bidder may have forced the creditors to thrash out a workable deal, sources said. If the deal goes through, the Indian company will relocate the ailing plant to a low-cost zone.
The deal would help it reach out to emerging markets like Mexico, Poland, Vietnam and Chile and developed markets like the US, France, Japan; besides, it would benefit from the OE relationship with Maytag, USA and Bosch-Siemens, Germany. After a due diligence, Videocon had said the original $730 million bid should be lowered by 15%.
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Strongly opposing this, creditors had dropped Videocon as its preferred bidder in December 2006. Subsequently, Videocon raised the price by 10% and a fresh round of negotiations began. Daewoo is estimated to have global sales of about $2.5 billion, whereas Videocon Industries’ consumer electronics business is generating revenues of about $1.5 billion. The Videocon-led consortium emerged as the preferred bidder in September 2006 to buy a controlling 97.6% stake in Daewoo Electronics. Daewoo has been under a creditor-led debt-restructuring programme since 2000 after its insolvent parent Daewoo Group was put under the workout programme.
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