SEOUL – Sambu Engineering & Construction Co., a company currently undergoing corporate rehabilitation, has been ordered by a court to convert its merger and acquisition (M&A) procedure to a public tender process. The decision was made by the Seoul Bankruptcy Court, which recognized the need to switch from the company's previous method.
The company had initially pursued an M&A using a 'Stalking-Horse' method, which involves securing a conditional acquisition agreement before a public bid to attract better offers. However, this approach failed to yield results due to delays in submitting proof of funds, the burden of unconfirmed debt, and risks associated with alleged violations of the Capital Market Act by its current and former executives. Consequently, the court accepted Sambu E&C's request to transition to a public sale method to maximize the sale price and ensure a more transparent and rapid process. The company plans to issue a sale notice on the 15th, accept letters of intent until October 17th, and receive final acquisition proposals by October 31st.
This decision comes amid a separate legal battle for the construction firm. Sambu E&C is currently under investigation by a special prosecution team for alleged involvement in the Kim Keon-hee stock manipulation case. The team suspects the company of deceiving investors by distributing press releases in May 2023 about business agreements made during a Ukraine reconstruction forum in Poland, thereby misleading them into believing the company was a major player in reconstruction projects.
In connection with the investigation, the special prosecution team sought arrest warrants for several key executives, including Chairman Lee Il-jun and former CEO Lee Eung-geun. While Chairman Lee and former CEO Lee have since been arrested and indicted, the warrant for former Chairman Cho Seong-ok was dismissed. Vice Chairman Lee Ki-hoon, who failed to appear for his warrant hearing and went into hiding, was recently apprehended on the 10th.
Founded in 1948, Sambu E&C was a pioneer in the Korean construction industry, having been the first to receive a civil engineering license. It played a significant role in major infrastructure projects, including the Gyeongbu Expressway, and was once among the top 10 construction companies in the country. However, the company has faced long-standing financial difficulties, filing for rehabilitation in 2015 before officially entering its current corporate rehabilitation proceedings on March 6th.
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