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Wednesday November 8, 1:13 PMS.Korea prosecutors plan fresh Lone Star warrantSEOUL, Nov 8 (Reuters) - South Korean prosecutors said on Wednesday they would submit another request to detain the vice chairman of U.S. buyout fund Lone Star in a stock trading probe after a court rejected their second request overnight.Prosecutors have been searching for irregularities in the way Lone Star [LS.UL] acquired Korea Exchange Bank in 2003, as well as suspected unfair stock trading in the bank's credit card unit before the bank absorbed it in early 2004. That has been delaying the Dallas-based fund's planned sale of its stake in KEB and that of two other shareholders to Kookmin Bank for $7.3 billion, and might even put the agreed transaction at risk. "We will submit a new version of the request soon," said Kang Chan-woo, a spokesman at the Supreme Prosecutors' Office, on Wednesday. A South Korean court rejected a second request by prosecutors to detain Ellis Short, along with a warrant request to arrest the head of Lone Star's local unit, Paul Yoo, on similar charges, said Lee Hyo-je, a judge at the Seoul Central District Court. The investigation is being closely watched by investors worried prosecutors may be singling out foreign interests. Shares in KEB fell 2.42 percent to 12,100 won by 0459 GMT and Kookmin dipped 0.27 percent to 74,600 won, versus the wider market's 0.43 percent drop. The court turned down on Friday a first detention request by prosecutors, bringing a swift challenge from the Supreme Prosecutors' Office which submitted the new request. Officials at the Seoul Central District Court were waiting to hear from prosecutors. "The prosecutors have the options of submitting more requests," Judge Lee said. "We'll have to wait and see." Analysts were divided over the effect of the latest refusal. "We still expect the KEB deal to go through eventually," said Choi Chung-uk, an analyst at Korea Investments & Securities. "The prosecutors seem to be having a hard time assembling clear proofs against Lone Star." Others said the prosecutors' willingness to re-submit requests was a sign that the investigation could drag on and put the deal in jeopardy. "The key to the whole deal is the outcome of the prosecutors' investigation, and right now the prosecutors are showing a lot of persistence," said Ku Yong-uk, an analyst at Daewoo Securities. "It's a very confusing situation. There are too many scenarios right now," he said, including a protracted series of warrant requests, or the cancellation of the whole deal. Earlier, Lone Star Chairman John Grayken welcomed the court's overnight decision in a statement. "We are gratified that for the second time in a week the Court did not accept the Prosecutors' accusations, even in the face of the very public pressure on the Court applied by the Prosecutors' Office," said Grayken. |
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