Pantech seeks new owner via private negotiations

By Yoon Sung-won

Pantech, which is under court receivership, is trying to secure operating funds through overseas sales and drastic handset price cuts as it is desperately seeking a buyer for the resale of the company.

The nation’s smallest handset maker is scheduled to export its flagship smartphone, the Vega Iron 2, to Vietnam and Taiwan, a Pantech official told a local media outlet.

The company said the sales profits will help it get through its current business difficulties.

“The exports, which are part of the overseas business we have done so far, will be a help for us because we are in need of cash to operate the company,” a Pantech spokesperson said.

The company did not disclose exactly how many handsets it will export.

The model has garnered significant popularity in the domestic market thanks to the company’s drastic price cut. It has lowered the model’s price from 783,200 won ($701.98) to 352,000 won with all three mobile carriers. When added to the subsidies provided by the companies, customers can buy one for less than 200,000 won.

Though the recent inventory sales might help the cash-strapped company, it still needs a buyer as it pushes ahead with the resale of the company after public bidding ended without a bidder.

The handset maker and Samjong KMPG, an accounting firm that supervises disposal procedures, said on Nov. 25 that they have agreed upon a resale.

“We will stick to selling the company again. We cannot give up just because we failed to attract a bidder one time,” a Pantech spokesman said.

The accounting firm said the resale will be conducted through private negotiations, not public bidding.

In that process of private negotiation, the accounting firm will contact potential buyers before selecting one.

The creditors and Seoul Central District Court still may decide to liquidate the company in a worst-case scenario.

But that possibility is remote because Pantech’s value was estimated at about 380 billion won, which is higher than that what liquidation might bring _ an estimated 190 billion won.

A detailed schedule for the resale is expected to be decided on through a discussion between creditors and stakeholders slated for Dec. 5.

The accounting firm also said it may sell Pantech’s technology patent rights and manufacturing facilities in seeking the new owner of the handset maker by next month.

For Pantech’s creditors ― Qualcomm, Samsung Electronics and local financial institutions, including the Korea Development Bank (KDB) ― selling is the best option to avoid liquidation, which would significantly depreciate the value of their stakes. The group of creditors is led by KDB, while Samsung and Qualcomm have not been directly involved in Pantech’s management.

An analyst pointed out selling Pantech’s technology patent rights is the most pragmatic option.

“The company’s patent rights are tempting to many foreign buyers. It seems unlikely that the company, whose business is concentrated in the domestic market, will improve its performance under the current Telecommunications Law, which tightly regulates the handset retail sales here,” said Kiwoom Securities analyst Kim Ji-san. “The creditors will want this to recover their investment. Setting aside Samsung Electronics and Qualcomm, which have sold their semiconductor products to Pantech, the other creditors can lose even more here.”

Samjong said earlier that the public bidding last week was closed after no one willing to take over the troubled handset maker came forward.

Pantech, led by its CEO Lee Joon-woo, has been under court receivership since August after being hit hard by a liquidity crisis.

Companies including China’s Hauwei, Lenovo, Xiaomi and ZTE, as well as India’s Micromax, had been referred to as potential bidders, but none have took any action.

Pantech remained pessimistic about the possibility of selling its handset technologies and related patents separately.

“If bidders see our visible assets as a hindrance, we may consider separating them in selling,” the Pantech spokesman said. “These technologies are like the company itself, and selling them separately is no different from liquidating the company. So for us, it is not really an option.”