[Intl-tobacco] Korea: KT&G to be privatized within first half

[Robert Weissman]

KT&G to be privatized within first half
Source: Korea Herald, 2002-01-25

The government plans to complete the privatization of Korea Tobacco
& Ginseng Corp. (KT&G) within the first half of the year by
unloading its remaining stake in the tobacco monopoly, the Ministry
of Finance and Economy said yesterday.

"The 33-percent interest in KT&G will be sold at home and abroad
simultaneously in May or June this year," the ministry said. "The
government is pushing for the sale, because the lock-up period for
depositary receipts issued to foreign investors in October will end
in late April."

The Industrial Bank of Korea owns a 19-percent stake in the tobacco
monopoly, while the Korea Development Bank and the Export-Import
Bank of Korea hold 7 percent stakes, respectively. Given the current
price, the government's stake is worth around 1.1 trillion won.

Of the total government stake, 14 percent will be sold to foreign
investors and the remainder will be sold to domestic buyers, the
ministry said.

"Foreigners will be allowed to own up to 49 percent of KT&G," a
ministry official said. "KT&G will change its corporate charter in
an annual shareholders meeting in March to expand the limit on
foreign ownership to 49 percent from the current 35 percent."

The proceeds from the sale of the 14-percent interest are expected
to reach around $500 million, while the government will determine
whether to issue global depositary receipts or exchangeable bonds
after holding overseas road shows," he said.

The government will sell the remaining 19 percent stake to domestic
investors through open bidding in order to minimize the impact on
the stock market, the ministry said.

A potential buyer will be allowed to buy up to a 2 to 3 percent
stake in the company in line with a government principle that no
single shareholder should gain control of the tobacco monopoly, it
said. Under KT&G's corporate charter, a shareholder is allowed to
own up to 7 percent.

In October last year, the government issued global depositary
receipts worth $310 million and exchangeable bonds worth $240
million abroad to reduce its stake in KT&G by 20 percent.