The planned sale of Daewoo Electronics to Entekhab Industrial Group for 577.7 billion won ($534.9 million) has collapsed after the Iranian company failed to make a full payment, the South Korean company’s creditor said.
Creditors will start negotiations with potential buyers including Electrolux AB, which was a second preferred bidder, Lee Yong Gyu, a Seoul-based spokesman for Woori Bank said by telephone. Two phone calls to Esfahan, Iran-based Entekhab went unanswered.
The failure to sell the company will prolong Daewoo creditors’ decade-long search by Daewoo’s creditors for a buyer for the former unit of Daewoo Group. The group was once South Korea’s largest conglomerate before it collapsed in 1999.
Entekhab agreed to buy Daewoo in November after creditors of the Seoul-based company scrapped a sale to New York-based, asset management firm Ripplewood Holdings LLC in January 2009 because of differences over sale terms.
A source who declined to be named said Entekhab made a request to cut the price by about 60 billion won ($55.4 million), but the request was not accepted.
The move is the latest setback to the sale process, which creditors had hoped to wrap up after a series of failures.
The unlisted Iranian appliance maker was named preferred bidder for Daewoo last year, beating rival Electrolux, but it has repeatedly failed to satisfy creditor demands for a detailed funding plan, resulting in several months of delays to the final agreement.
Electrolux spokesman Erik Zsiga said the group would not comment on the issue until there was official confirmation that the deal with Entekhab had fallen through, but repeated that the Swedish company remained open to talks if approached. Electrolux was still interested in buying Daewoo if the takeover by Entekhab falls through, Chief Executive Officer Keith McLoughlin said in February (see this story).
Erik Zsiga said he was not aware if the company had already been approached regarding Daewoo.
It was the fourth attempt by creditors to sell Daewoo, which primarily makes washing machines and refrigerators.