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Bids mulled for Chohung sale
SEOUL, South Korea -- Chohung Bank said Monday it will boost its loan-loss reserves, to make it more attractive to buyers. The government wants to sell a controlling stake in Seoul-based Chohung. It owns 80 percent of the bank, which it took over in the aftermath of the Asian financial crisis. A government panel meets later Monday to review two competing bids for the bank. A team led by Seoul-based Shinhan Financial Group, and including France-based BNP Paribas, has reportedly offered around 2.93 trillion won ($2.4 billion) in cash for the entire 80 percent stake. The other offer is headed by U.S. buyout fund Cerberus Partners, and includes Korea First Bank and Shinsei Bank of Japan. They have offered around 1.73 trillion won ($1.4 billion) in cash for a 51 percent stake. A decision unlikely MondayThe Shinhan offer values the bank at around 5,400 won per share. The Cerberus bid puts it at around 5,000 won per share. On Monday, Chohung said it would set aside 260 billion won in reserves to cover loan losses in the first half of 2003, supplementing 870 billion in loan-loss reserves from the second half of 2002. It made the move to boost its attractiveness. But the government is unlikely to pick a winner at Monday's meeting. The head of the government committee overseeing the sale, the Public Fund Oversight Committee, has said it needs more time to evaluate the bids. Chohung's management has also been pushing for a delay in the sale, hoping for a higher price. The team figures the bank is worth some 7,500 won a share, much higher than either of the bids. Hoping for a higher priceThe bank says business conditions and profits will improve next year after it deals with writing off loans this year. It is also hoping for a rebound in its stock price. Investment bank Morgan Stanley, the lead manager of the sale, earlier said that Chohung was worth between 4,000 won and 6,400 won per share. Chohung stock is down 2.46 percent at 4,965 won on Monday, contributing to a 1.76 percent slide in the benchmark Kospi index.
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