Hana Financial Group said Friday it had reached agreement to extend the deadline for what would be South Korea's biggest bank takeover, after the US$4 billion deal hit a major regulatory hurdle.

Hana said the deadline for its deal to buy Lone Star Funds' 51 percent stake in Korea Exchange Bank (KEB) was extended to November 30, after a May 24 deadline passed without approval from the Financial Services Commission.

The group, in a regulatory filing, also said the offer price had been cut to 13,390 won a share or a total 4.41 trillion won (US$4.17 billion), from 4.69 trillion previously.

Hana, the country's fourth largest banking group, will have to pay the US buyout fund an extra 100 won per share every month if the deal is not closed by the end of September.

But it also said the bid price would drop by whatever sum Lone Star receives in dividends from KEB, the country's fifth biggest bank, until the deal is closed.

The announcement resurrects the deal but it remains unclear whether regulators will approve it. The Financial Services Commission says it will not make a ruling until a court case is resolved.

Lone Star is contesting charges that it manipulated the stock price of a then-listed KEB credit card unit in 2003 to cut the cost of the unit's merger with the main bank.

The US fund could lose its official status as KEB's largest shareholder if convicted of a legal violation. The Seoul High Court has scheduled a hearing in the case for July 21.

Lone Star, which invested US$1.3 billion in KEB in 2003, has failed in two previous attempts to exit the bank.

Hana said its deal would remain in effect even after November 30, so long as neither party decides to terminate the existing contract.

Hana had been trying to reduce the takeover price after KEB's decision to pay a record interim dividend cut its corporate value.

KEB's board decided last week to pay a quarterly dividend of 1,510 won per share, bringing Lone Star a payment of 496.9 billion won.

channelnewsasia.com