Unlisted Iranian appliance maker Entekhab Industrial Group will sign a deal soon to buy South Korea’s Daewoo Electronics for about 577.8 billion won ($513 million), Daewoo’s leading creditor said on Wednesday.
Woori Bank, which represents creditors-turned-shareholders of the unlisted Korean firm, said they will sign an official contract with Entekhab as soon as possible after receiving letters of endorsements from creditors by early next week.
The Iranian company had trumped Swedish electronics firm Electrolux earlier this year and was named as a preferred bidder for Daewoo, once the flagship unit of the failed Daewoo Group and now almost wholly owned by its 39 creditors.
It is the fourth attempt for the creditors to sell Daewoo, which focuses primarily on washing machines and refrigerators.
In the previous bidding rounds, a series of sales talks fell through with Ripplewood Holdings, a private equity unit of Morgan Stanley, and a consortium of India’s Videocon Industries and RJH International.
But the stake sale has been being stalled recently as the Iranian company faces difficulty borrowing money from local lenders amid widening financial sanctions against Iranian firms.
Korea said in September that Iranian entities will be banned from domestic financial transactions as part of sanctions over Tehran’s suspected nuclear program. Quite how this will work in practice remains to be seen.
Export-focused Daewoo competes with bigger local rival Samsung Electronics and LG Electronics as well as many low-cost Chinese producers.
Despite decreased revenue in 2009, Daewoo reported an operating profit for the year of US$43 million, which it credited to focusing on profitable businesses. Revenues in 2009 were approximately US $1 billion.
Daewoo Electronics Corp. was once a part of South Korea’s massive Daewoo Group, which went bankrupt in 1999, putting ownership of Daewoo Electronics in the hands of several creditors.