Solid Consortium Will Not Have Any Problem Paying Balance Of $33 Million

Solid-Optis Consortium’s arduous journey of buying Pantch is coming to an end as it is practically done if it pays balance on the 8th. It will not have any problem of paying rest of balance and it seems that creditors will not be objective to it. Pantech that was almost near bankruptcy is coming back.

Solid-Optis Consortium made an announcement on the 7th that it will pay rest of balance of $33 million (38.5 billion KRW) by the due date and it already made payments of $6.9 million (8 billion KRW) that includes second payment of $3.5 million (4 billion KRW) in last August.

“We are going to do actual work on the morning of the 8th such as delivering the balance of $33 million and others. Although there will be public bond including employees’ pension left over in a new corporation that we are buying if Pantech’s previous debts and corporate bodies that are still existing are liquefied, it will not have any effect on work progress.” said CEO Jung Joon of Solid.

Pantech, court, and Consortium divided Pantech into a corporate body that still exist and a new corporation after discussing with each other and decided on a plan that will sell new corporation to Consortium. A corporate body that still exists repays debts by adding money from sales and money from selling previous assets such as factories and others. Rest of debts gets cancelled afterwards and a corporate body gets liquefied. Although there is certain amount of pubic bond such as employee’s pension and utilities bills that are overdue, the amount is not that much.

Photo Image

Consortium will do employment buyout on about 500 formal Pantech employees to a new corporation and buy patents, about 20 AS centers, and part of Kimpo production facilties for $40 million (46.5 billion KRW). A reason why it extended the remaining balance’s due date, which was originally due on the 4th of September, is because it wanted to buy out more employees, production facilities and others.

Whether Consortium will be approved or buying Pantech or not will be decided at assembly of people that are related to this matter that will take place on the 16th of this month. Creditors will finalize their decisions after looking at if Consortium paid the amount that was due, if it hired enough employees, and if it prepared enough business planning. However it is most likely that Consortium will receive an approval since it went through many steps of adjustments.

After it receives an approval, then it will start working on to bring back Pantech. It will establish a joint-corporation with its cooperative company in Indonesia and exchange MOU so that it can start its business in Indonesia. It will supply Pantech’s technologies and develop products while joint-corporation will be in charge of manufacturing and sales.

Photo Image
<CEO Jung Joon of Solid>

It will enter Indonesian market by having an intimate relationship with mobile telecommunication businesses and distributors in Indonesia as its foundation. Population of Indonesia reaches 250 million, and Indonesia is rapidly changing 2G to LTE4. If its business is successful in Indonesia, it will expand its business range towards other Southeast Asian countries.

For now it will release either one or two Smartphone models with competitive edge in South Korea, and release date of a new model is not yet decided. South Korea’s premium Smartphone market is pretty much monopolized by Samsung and Apple, and medium and low-priced phone markets are expanding. It is high likely that Pantech will also go after medium and low-priced phone markets and its primary goal is finding positions that are appropriate to Pantech’s capabilities rather than going after premium markets like it did in the past.

“Although some people are saying that Pantech’s calling can be changed, I have not thought about that yet.” said CEO Jung Joon regarding Pantech’s brand. “We are currently discussing whether or not we should change ‘Vega’, which is Pantech’s major brand, to freshen up the atmosphere.”

As Pantech was going through a legal management in August of 2014, it could not do any normal business for more than a year. Although it was able to sustain itself by selling products that were in stock, it could not avoid being closed temporarily as most of them ran out in early this year. It seems that it will resume its business in early half of next year at the earliest.

It means a lot that Pantech is coming back from a perspective of customers’ rights of choice and diversification of mobile telecommunication market. Mobile telecommunication businesses can also attempt to diversify their strategies due to increase in opportunities to choose. Above all if Pantech that was a success story of venture resumes its business, it will bring new hopes to many future founders that are still dreaming about establishing ventures.

Staff Reporter An, Hochun | hcan@etnews.com

Photo Image
<Daily log of Solid-Optis Consortium’s process of buying Pantech ▲On 6/16/15, court approved Pantech and Optis Consortium to exchange M&A MOU, and Optis started to inspect Pantech. ▲On 7/16/15, Solid that specializes in equipment joins the consortium ▲On 7/17/15, Consortium signs on an official contract ▲On 7/25/15, Consortium submits proposal about its plan to bring back Pantech to court ▲On 8/17/15, Solid-Optis Consortium pays second payment of $3.5 million to buy Pantech ▲On 9/4/15, Consortium postpones remaining balance’s due date, which was originally this date, to 10/8/15. ▲On 10/8/15, Consortium paid remaining balance of $33 million. ▲On 10/16/15, an assembly of people that are related to this matter will take place. Reference: Combination of information from industries >