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Thursday, 09 December 1999

Morgan Stanley, Goldman, Lone Star, Deutsche Buy Korean Loans

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December 10, 1999

By B.J. Lee, Correspondent

SEOUL, South Korea – Korea Asset Management Corp. (KAMCO) has sold $897 million of nonperforming loans to four foreign investor groups: Morgan Stanley, Goldman Sachs, Lone Star Korea and a venture between Deutsche Bank and Samsung Life.

KAMCO, which manages and liquidates bad assets said the loans were secured by factories and land lots. The government recovered $386 million, or 43 percent of their outstanding balance.

The average sales price for the loans was the highest the agency has achieved since it started selling bad loans in September 1998.

Of the nine tranches sold in the auction, Morgan Stanley won five, Goldman Sachs two, Lone Star one and the German-Korean consortium one. Each formed a partnership with a loacal investor group. A total of 13 investors competed for the assets.

"Kamco is very pleased in the high level of domestic interests in this auction and the international and domestic investment communities' acknowledgement of Kamco's commitment to the principles of fairness, transparency and simplicity," the agency's president, Chung Jae-ryong, said.

He added that the "auction reconfirmed the confidence in the Korean economy despite the Daewoo crisis."

Griffiths, McBurney & Partners Asia Inc. served as a financial adviser to KAMCO while Samjong Accounting Inc. conducted due diligence. Sidley & Austin and Lee & Ko provided legal services.

Prior to this week's auction, Kamco had disposed of $18 billion worth of non-performing loans out of $50 billion in bad loans it acquired after the agency was reorganized in November 1997 at the height of the Asia financial crisis.

Here is the breakdown of this week's auction, by tranche as described by Kamco:

* Industrial manufacturing facilities sold to Morgan Stanley for 21.1 percent of book value.

* Industrial manufacturing facilities sold to Lone Star for 24.7 percent.

* Industrial manufacturing facilities sold to Morgan Stanley for 37.2 percent.

* Commercial facilities sold to Goldman Sachs for 53.3 percent.

* Resort facilities sold to Morgan Stanley for 23.1 percent.

* Undeveloped land sold to Goldman Sachs for 46.5 percent.

* Mixed assets sold to Morgan Stanley for 64.2 percent.

* Mixed assets sold to Morgan Stanley for 60.2 percent.

* Mixed assets sold to the consortium of Deutsche Bank and Samsung Life Insurance for 61.2 percent.


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Additional Info

  • Syndicate to Realpoint: No
  • Subject: International (INTL), Property Acquisitions (ACQ)
  • Company: Dominion Bond Rating Service, Gotham Partners LP, Mortgage Bankers Association of America
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