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Keystone PE signs MOU to buy Dongbu Corp.

Collected: 2016.05.21

Distributed: 2016.05.27

Source: Go Direct

Keystone Private Equity L.P. (Keystone PE) signed a memorandum of understanding (MOU) with Dongbu Corp. to buy the ailing builder under a court workout program. The news comes about a week after the private equity fund was picked as the preferred for the builder, raising hopes that the troubled builder would finally find a new owner after its final negotiations with Pine Tree Investment & Management Co. fell through.

According to Dongbu on Friday, the two parties will have 15 business days for accounting and legal due diligence before signing a main agreement this month.

Dongbu initially chose Pine Tree Investment & Management as its preferred bidder, but failed to sign an MOU with Pine Tree Investment & Management due to difference over the price after several attempts. Market observers note that as Dongbu signed an MOU with Keystone PE in about a week after the private equity fund was named as the preferred bidder, there is a higher chance for the builder to find a new owner this time.

The California-based private equity fund would need to raise about 200 billion won ($168.1 million) for the acquisition of Dongbu Corp., and Korea Real Estate Investment & Trust Co. (KOREIT) is said be coming up with another 50 billion won of the total. KOREIT with engineering and construction projects worth multi-million dollars is also expected to provide strategic support to the private equity fund.

Keystone PE, which has repeatedly shown its interest in buying Korean builders, is also eyeing on Sambu Construction Industrial Co. and recently handed in a letter of interest (LOI) to partake in the buyout auction.

By Chun Gyung-woon

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