Lone Star plans another dividend under new deal

Lone Star Fund is in talks with Hana Financial Group to recoup another quarterly dividend off the Korea Exchange Bank as part of its re-negotiation to sell its majority stake over to Hana, sources involved in the negotiation said Monday.

The insider said details of the payout dividend are expected to arrive when the two officially extend the $4.3 billion takeover deal of KEB for six months. The two are widely expected to declare a new deadline to the agreement made in November to close the transaction by May 24, as the financial regulator has delayed its approval of the proposed takeover.

“Lone Star is talking to Hana about how much dividend it can take out of KEB while maintaining the $4.3 billion takeover price,” the official said.

Lone Star’s plans to payout dividend come on the heels of regulator’s efforts to stop KEB from paying excessive dividends. The nation’s sixth-largest bank, owned by the Dallas-based company, paid out 1,085 won per share last year across three slots for about 70 percent of net profits. Financial regulators recommend that 30 percent is an appropriate dividend ratio.

KEB is believed to have a sufficient amount for another dividend as it has received 1.24 trillion won ($1.15 billion) by selling an 8.72 percent stake in Hyundai Engineering & Construction to Hyundai Motor Group in April.

Lone Star had already recouped its $1.3 billion investment in the company from 2003 by receiving dividends and the sale of a 13.6 percent stake in KEB in 2007.

Lone Star and Hana is currently facing yet another regulatory hurdle from the Financial Services Commission, which last month said it will delay the approving of the sale until legal issues involving eligibility of Lone Star as KEB’s financial owner clears.

A Hana spokesperson said the company is ready to acquire less than 10 percent of KEB from Lone Star first to ensure their commitment to the deal. Lone Star, eager to exit from domestic market with quick sale of its 51.02 percent stake in KEB, has been discussing options even after the lapse of the May 24 deadline.

If sealed, the deal will result in the reshaping of the country’s financial landscape as the combined entity would be put to third not far behind the top two banks ― Kookmin and Woori.

By Cynthia J. Kim (cynthiak@heraldcorp.com)