SEOUL, South Korea (AP) _ Britain's HSBC and Lone Star Funds said Tuesday they have extended by three months a date for completing HSBC's proposed purchase of South Korea's sixth-largest bank from the U.S. buyout fund.
Last year, London-based HSBC Holdings PLC announced plans to acquire Lone Star's 51 percent controlling stake in Korea Exchange Bank pending regulatory and government approval.
HSBC said Tuesday in a statement to the Hong Kong stock exchange that its subsidiary HSBC Asia and Lone Star agreed to extend the acquisition agreement to July 31. The original contract was to have expired Wednesday.
HSBC said that the purchase price stood at approximately $6 billion based on Friday's U.S. dollar-South Korean won exchange rate.
The case has been closely watched by foreign investors in South Korea.
Former South Korean government officials as well as ex-KEB executives have been charged in relation to the Lone Star deal. Earlier this year, a South Korean Lone Star executive was sentenced to five years in prison over a stock price manipulation case. An appeal is pending.
Dallas-based private equity group Lone Star has long battled suspicions that it was able to purchase KEB in 2003 at a bargain price after colluding with government officials to understate the bank's financial health.
Lone Star denies any wrongdoing and has countered that its rehabilitation of the once financially strapped KEB has been good for South Korea's economy.
South Korea's Financial Services Commission Chairman Jun Kwang-woo said that the new pro-business administration of South Korean President Lee Myung-bak "is trying to take proactive steps on this matter to find a way to resolve this." He said the Lone Star issue was harming South Korea's image under Lee, who has vowed to increase foreign investment during a five-year term that began two months ago.
Shares in KEB finished unchanged Tuesday at 15,700 won ($16). The announcement came after the close of trading in Seoul.
Associated Press Writer Min Lee in Hong Kong contributed to this report.
Copyright 2008 The Associated Press.