A Korean judge ordered Lone Star’s former head of Seoul operations, Paul Yoo, to be arrested, saying he was a flight risk, Reuters reported. The arrest is the latest incident in the drama of Lone Star’s attempts to sell its majority stake in Korea Exchange Bank. The buyout firm planned to sell KEB to Hana Financial Group in a $4.1 billion, but the deal has been halted by charges that Lone Star manipulated stock prices in the run-up to its acquisition, Reuters wrote.
(Reuters) – A Korean judge on Thursday ordered the former head of the Seoul operations of U.S. private equity fund Lone Star be arrested, saying he was a flight risk in a case that has cast a shadow over foreign investment in Asia’s fourth largest economy.
Lone Star wants to sell its majority stake in Korea Exchange Bank (KEB) to Hana Financial Group in a $4.1 billion deal that has been halted by charges that it manipulated stock prices in the run-up to its acquisition.
Lone Star denies the charges.
The order for the arrest of Paul Yoo, who is still on the board of KEB, drew applause from some of the dozens of onlookers, some wearing KEB union shirts, packing the courtroom.
The union opposes the sale to Hana and some ordinary Koreans believe the case shows how foreign funds bought assets on the cheap in the wake of South Korea’s 1998 financial crisis.
Defence lawyers filed an appeal for KEB on Thursday seeking that it should not be arraigned on the same charges as Yoo and Lone Star in a move that may further delay the legal process.
Lone Star is seeking to sell to Hana after two previous deals collapsed and Korean regulators have said they cannot rule on the sale until legal proceedings have been completed.
(Reporting by Ju-min Park; Editing by David Chance)