On January 17, 2018, Korea Cement Holdings, a special purpose company of Baring Private Equity Partners Ltd. (the “Seller”), together with individual sellers, sold 100% of the equity interest in Halla Cement Corporation (the “Company”) to Asia Cement Co. (the “Purchaser”) for KRW 365 billion (the “Transaction”). 

This Transaction was important in determining the future direction and competitive landscape of the Korean cement industry.   Following the acquisition of the Company, the Purchaser’s market share in the industry increased significantly, becoming one of the top three market leaders, each having a market share of 20% or more in the industry.  

In representing the Seller, Kim & Chang provided comprehensive legal advice to the client during all stages of the transaction, i.e., from the preparation of the bidding process until the closing by, among others things, conducting vendor due diligence and preparing a vendor due diligence report, drafting and negotiating the share purchase agreement, assisting the client with evaluating and communicating with bidders in the bidding process, assisting the client with preparing for management incentives for the Company’s key employees, providing advice on tax structuring, coordinating the filing of a business combination report with the Purchaser’s counsel, assisting the client with completing the complex steps for the termination of the acquisition financing, and consummating the closing.

This Transaction is a noteworthy example for sellers using competitive bidding processes, as the transaction offered maximum certainty of deal closing and an absolute clean exit for the Seller, while allowing the Seller to achieve maximum investment performance results within a short period of time (one to two years) through leveraged financing.  

To achieve such closing certainty and clean exit, Kim & Chang helped the Seller introduce and negotiate mechanisms in the share purchase agreement to limit the conditions/uncertainties towards the closing, and the Purchaser’s ability to make any claim against the Seller post-closing, such as the requirement for the Purchaser to obtain warranty insurance at its cost.  We also helped to ensure that the Seller’s security provided under the financing documents was transferred to the Purchaser post-closing.