[Intl-tobacco] Korea: Tobacco monopoly to sell 25% stake overseas (fwd)

[Robert Weissman]

Tobacco monopoly to sell 25% stake overseas

by Cho Young-sam Staff reporter / (ysc@koreaherald.co.kr)
Source: Korea Herald, Saturday, 3/24/01

The shareholders of Korea Tobacco and Ginseng Corp. (KT&GC) passed a
resolution yesterday to raise the foreign ownership ceiling to 35 percent
from 25 percent, to assist the government's planned overseas stake sale,
officials said.

This would pave the way for the government - which still holds a 53
percent stake in the cigarette manufacturing monopoly - to divest itself
of about 20-25 percent of the company's stock overseas through depositary
receipts (DRs) until June, depending on the response from investors.

The Ministry of Finance and Economy reported earlier this month that it
would push to raise the foreign ownership ceiling in order to complement
the firm's privatization plans. This is because foreigners already own
about 15 percent of KT&GC, which would have only permitted an offshore DR
sale of about 10 percent, officials said.

However, the seven percent ownership ceiling for each single foreign
entity still stands.

Specific details on when and how many of the shares will be sold via DRs
will depend on the outcome of ongoing talks between KT&GC and the Ministry
of Planning and Budget, but officials said an announcement should be
expected soon.

Once the deal goes through, KT&GC's privatization process may get into
full swing, but at a steep cost. KT&GC shares have been trading at
14,000-15,000 won in the past month, far short of the 28,000 won they
traded for back in 1999 when they were first offered to the public.

These low prices were the main reason for the government's decision to
cancel its divestiture plans late last year.

The Industrial Bank of Korea still holds 25.2 percent of KT&GC's
outstanding shares on behalf of the government, while the finance ministry
holds another 13.8 percent. Both the Korea Development Bank and the
Export-Import Bank of Korea each have a seven percent stake.