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Lone Star Submits Papers To Avoid Sanctions

SEOUL (Reuters) – Lone Star has submitted documents requested by South Korean authorities that could help the private equity house avoid sanctions including the forced sale of its shares in Korea Exchange Bank (KEB), already offered to HSBC.

The Financial Services Commission (FSC) said on Tuesday that U.S.-based Lone Star LS.UL had submitted requested documents related to the regulator’s review of whether the Dallas-based firm was a qualified top shareholder in a domestic bank, a standard procedure for major shareholders in local lenders.

The private equity firm holds a 51 percent stake of KEB (004940.KS: Quote, Profile, Research, Stock Buzz), the country’s No. 6 bank, for which global banking giant HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) (0005.HK: Quote, Profile, Research, Stock Buzz) has offered $6.3 billion.

“Lone Star delivered its stance that it will help with the (FSC’s) requests when it submitted the related documents,” the agency said in a statement.

On September 2, the FSC said it could fine Lone Star for failing to submit regulatory documents it said were due at the end of August, and that if fined, Lone Star would be ordered to sell shares in KEB immediately.

“As regards to the fining matter, the Financial Services Commission will get through the procedures as was announced, but any decision will be made after consideration of overall conditions,” the commission said.

Any ruling against Lone Star could prompt HSBC to seek to lower the $6.3 billion it offered for the stake in KEB, analysts said.

FSC Chairman Jun Kwang-woo said on Monday that the government may give the go-ahead to HSBC’s offer to buy control of KEB in the near future if it finds no faults with documents submitted by the companies involved.

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)