By Lee Hyo-sik
Staff Reporter
U.S. investment fund Lone Star will receive about 41.1 billion won in dividends from the Korea Exchange Bank (KEB) this year. Together with dividend income in 2007 and 2008 and the sale of KEB stocks, the Texas-based buyout fund has retrieved funds equal to 87.3 percent of its 2.15 trillion won investment in the bank, or 1.88 trillion won.
Korea's fifth largest lender said Wednesday in a regulatory filing that the bank's board of directors decided to pay 125 won per share for its shareholders for 2008, totaling 80.6 billion won. It gave shareholders 700 won per share, totaling 451.4 billion won last year.
In 2007, KEB paid 1,000 won per share for shareholders, totaling 645 billion won, the first dividend payout by KEB in 10 years. From 2007 to 2009, the U.S. buyout fund earned combined dividend earnings of 688.2 billion won.
Additionally, in June 2007, Lone Star disposed of a 13.6 percent stake in KEB, retrieving 1.2 trillion won. With 688.2 billion won in dividend income for three consecutive years, the Texas-based private equity fund has retrieved a total of 1.89 trillion won, or 87.3 percent of its initial investment in KEB.
Lone Star still holds a 51.02 percent stake in the bank. In September 2007, it signed a $6.3 billion contract with London-based HSBC Holdings to sell the majority stake.
But the British banking giant decided not to acquire the majority stake in KEB a year later, citing the Korean bank's falling asset values and Lone Star's continued legal trouble with the Korean government over the fund's KEB takeover in 2003. HSBC reportedly abandoned the acquisition to secure more cash against the worsening global credit crunch.
Since then, KEB has been looking for potential buyers, but has found no one willing to take over Lone Star's KEB stake in the wake of aggravating global financial market turmoil.