Jinro moves closer to sale
closer to a sale after a number of investment banks acknowledged
that they were prepared to advise on the matter.
According to a report from FT.com, Merill Lynch is now well poised to take on the sale of the bankrupt company, which many observers believe could fetch as much as KRW 2,500 billion (€1.75bn). Goldman Sachs will be particularly keen to have a hand in the deal as it has been waging a long standing battle to retrieve a €400 million loan which it made to the company during the height of its financial crisis. Indeed Goldman Sachs successfully petitioned the South Korean courts to put Jinro into receivership in May of last year.
"As an investment bank, Goldman is not interested in taking over Jinro but it wants to collect its receivables through an auction," Goldman Sachs' public relations representative Edelman told the press last month.
In April another major creditor, Taihan Electric Wire agreed to drop an original plan to take over Jinro because of opposition from Goldman and other creditors. Taihan had offered to buy the company for KRW 1,300 billion, a figure that was widely believed to undervalue the company.
Around 20 companies have said that they are interested in bidding for the company, amongst them the Doosan Corp., which is currently the countries second largest soju-maker. However Taihan and another of Jinro's creditors, the Lotte Group, have also said they are planning to bid.
Jinro is a leading producer of soju, a favourite tipple for South Koreans that is traditionally made from rice and barely. It is a relatively low alcohol content for a spirit and is said to have a very subtle flavour comparable to that of vodka. Currently Jinro controls around 55 per cent of that market.
Athough the company reported a KRW 527 million profit for 2003, its financial troubles stem from the 1997/98 economic downturn, which came at a time when the company had just undergone a rapid expansion into the non liquor business. The company's ongoing debt is now running at €1.15 billion.
