E-Land plans to add rental costs to Kim’s Club takeover deal

[THE INVESTOR] E-Land Group is in the final stages of negotiations with US private equity giant KKR to include the rental costs of its local retail chain Kim’s Club branches to a deal to sell over 70 percent stake in the hypermarket, according to sources on July 19.

E-Land is pushing KKR, which was picked as the preferred bidder to acquire Kim’s Club in late March, to pay some 100 billion won (US$87.60 million) for five years of rental costs of the hypermarket franchise’ 37 branches in advance, people familiar with the matter said.

The offered price is 10 to 20 percent lower than the current fee.

If they strike the package deal, KKR is expected to pay about 500 billion won. The two firms are aiming to sign a contract in August.

All the 37 branches of Kim’s Club, which posted 660 billion won in revenue last year, are located within shopping malls owned by E-Land such as NC Department Store and NewCore outlet.

Paying the rental costs in advance will allow “E-Land to improve its finances while KKR can have a stable management environment for the five years,” an official at a local investment bank said.

By Park Han-na (hnpark@heraldcorp.com)