Monday, May 19th, 2014
SEOUL, KOREA - Korea Electric Power Corp. will sell off its shareholdings in Korea Plant Service & Engineering as part of the government's drive to improve the financial standing of state-run corporations. The 5.4 million shares (12%) to be on the sales block are valued at 362.3 billion won.
The electricity utility decided on May 18 to dispose of its 12-percent stake in the maintenance company in a block deal and sent out requests for proposal to major securities firms for selecting underwriters for the deal. Even after selling the 12-percent stake, Korea Electric Power will still have remaining shares of 51 percent in its subsidiary. The company will accept proposals by the 20th and determine the final underwriters immediately afterward.
Based on the closing price of 67,100 won on the 16th, the 12-percent stake in Korea Plant Service & Engineering is estimated at 362.3 billion won. Once the deal goes through as planned, Korea Electric Power will secure about 350 billion won in cash.
This is as part of the government's debt paydown policy on state-run enterprises. Korea Electric Power had announced a restructuring plan in March this year in which it promised to reduce the debt balance by 14.7 trillion won by 2017 through asset sales, business restructuring, and cost cutting. As part of the plan, the company is even trying to sell off its headquarters building in Seoul's Gangnam.
Since taking the subsidiary to public in 2007, Korea Electric Power has sold 5-7 percent of stakes in three occasions in December 2010, September 2012, and December 2013. But this is the first time for the company to sell off a stake in excess of 10 percent, which shows the seriousness of the company in paying down its debt.