Kyungnam Energy's buyout deal attracts more than 20 potential buyers

More than 20 potential buyers from home and abroad reportedly are mulling a buyout of Kyungnam Energy Co., natural gas distributor of South Korea, to take over 96.5 percent stake in the firm.

According to investment bank industry sources on Friday, 20 or more potential buyers reportedly signed a non-disclosure agreement with JP Morgan who is leading the Kyungnam Energy buyout auction and received deal materials on the natural gas supplier. It is said that the potential buyers include KDB Infrastructure Asset Management Co. and other local and foreign investors with large cash reserves.

Kyungnam Energy’s two largest shareholders are Sangwon Comtru Co. and Anchor Equity Partners Korea with 30.97 percent stake and 27.76 percent stake, respectively. A total of 96.5 percent stake including two shareholders’ entire stakes and treasury stocks is placed up for sale. Industry watchers expect the sale deal to fetch roughly 600 billion won ($511.5 million) amid heated bidding race.

The sellers have scheduled to open a preliminary auction on December 23 and draw up a shortlist of preferred bidders by end of this year. It is reported that main bidding will take place in February next year.

Kyungnam Energy is nation’s six largest natural gas distributor by supply volume following SK E&S Co., Samchully Co, and Daesung Group. It posted 724.7 billion won in sales last year, falling 13 percent on year, but its earnings before interest, taxes, depreciation and amortization (EBITDA) have been on upward trend. Its EBITDA is expected to rise 20 percent to 60 billion won from a year-ago period.

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