Hana in talks with Lone Star to extend KEB deal

SEOUL, May 24 (Yonhap) -- Hana Financial Group Inc., South Korea's fourth-largest banking group by assets, said Tuesday it is negotiating conditions with Lone Star Funds to extend a deal to buy Korea Exchange Bank (KEB) from the U.S. buyout fund.
Hana Financial reached the agreement last November to buy a 51.02 percent stake in KEB for 4.69 trillion won (US$4.3 billion). The agreement with a six-month validity period was to expire on Tuesday.
"Two firms are now fine-tuning terms for extending the deal," a Hana Financial spokesman said. "After reaching the extension agreement, we will report it to financial authorities."
Hana Financial's efforts to renew the share purchase deal came as the top financial regulator Financial Services Commission (FSC) indefinitely delayed regulatory permission for Hana Financial's KEB purchase.
Due to legal controversies over Lone Star's 2003 purchase of a credit card unit affiliated with KEB, the FSC deferred its decision over whether Lone Star is legally eligible to become the biggest shareholder of KEB. Granting eligibility is deemed a prerequisite for the FSC to permit Hana Financial's transaction with Lone Star.
The FSC said earlier this month it will not deliberate on Lone Star's eligibility issue until a final court ruling over the 2003 credit card purchase is delivered.
In March, the Supreme Court overturned a lower court's ruling that Yoo Hoi-won, the former head of Lone Star's Seoul branch, was not guilty of stock price manipulation designed to buy the credit card firm on the cheap. Lone Star integrated the credit card unit into KEB after purchasing it earlier in 2003.
The court sent back the case for a retrial. The Seoul High Court is scheduled to retry the case on June 22.
pbr@yna.co.kr