YTN shares held by state firms to be sold

The headquarters of YTN in Seoul / Courtesy of YTN

YTN expresses concerns over privatization

By Anna J. Park

YTN, Korea's first 24-hour news channel, is expected to find a new owner as early as September, as the government launched the procedures to sell its stake in the broadcaster earlier this week.

According to the investment banking industry, state-run IT service management company KEPCO KDN, which holds a 21.43 percent stake in YTN, sent a request for proposals (RFP) to major financial firms to select a manager firm for the stake sale.

Companies that have previous records of managing M&As or block sales of stocks in the past three years are qualified to apply for the job. KEPCO KDN plans to select the sales managing company in March to begin a series of procedures for the stake sale.

The state-run company aims to complete the stake sale by the end of September. “After selecting the sales managing firm in about March, the stake sales process will begin, according to transparent and fair procedures,” an official from KEPCO KDN said.

Considering that the closing price of Kosdaq-listed YTN ended at 5,940 won ($4.69) on Thursday's session, the 21.43 percent stake or 9 million common shares of YTN held by KEPCO KDN is estimated to be worth about 53.4 billion won.

Last November, the Ministry of Economy and Finance confirmed the plan to sell a 30.95 percent stake in the broadcaster held by the government, comprising KEPCO KDN's 21.43 percent stake and the 9.52 percent stake of another state-run agency, Korea Racing Authority (KRA). The two state-run companies acquired the total 30.95 percent stake in YTN for 74.5 billion won.

Although the combined 30.95 percent stake's expected value calculated from YTN's current stock price is about 60 billion won, it could rise to 200 billion won, when the management rights as well as real estate value of YTN are included.

Other shareholders of YTN include Korea Ginseng Corporation (KGC), which holds a 19.95 percent stake, Mirae Asset Life Insurance with 14.58 percent and Woori Bank with 7.4 percent.

Media companies that run daily newspapers such as The Hankyoreh, The Hankook Ilbo and the Korea Economic Daily are being mentioned as potential buyers interested in acquiring the channel.

Established in 1995, YTN suffered a severe loss during the Asian financial crisis of the late 1990s, and received capital from state-run KEPCO in 1997. In 1998, the broadcaster received an additional 110 billion won from the government, including 33 billion won from KEPCO and 20 billion won from the KRA.

Meanwhile, YTN expressed concerns over the government's decision to sell its stake.

“It is evident that YTN's current status as the representative news channel of Korea is only possible because it has enjoyed autonomy and is free from the market capital,” YTN CEO Wu Jang-kyun said during his New Year message earlier this week.