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Korean handset manufacturer Pantech heads towards liquidation
It’s no secret that South Korean smartphone manufacturer Pantech has been struggling for finances, but the company is now facing the very real prospect of going out of business. Pantech has been up for sale since 2011, but has failed to find a buyer and has now asked the Seoul Central District Court to end its receivership.
Pantech was placed under court protection in August, but has been unable to find a suitable buyer to take over its financial obligations. This means that Pantech, which was once the second largest handset manufacturer in the country, will likely have its assets sold to try and payback some of the money that it owes. According to data from the Financial Supervisory Service, Pantech’s total assets are worth 268.3 billion won (US$242.52 million), while its total debt stands at 996.2 billion won (US$900.48 million), as of the end of 2014.
If the court accepts the application within the next 15 days, it will consult parties of interest for the next two weeks on how to proceed. This leaves one final month for a buyer to materialize, but it’s likely that Pantech will be faced with a liquidation order.
“Despite our 10-month long efforts, we could not find an appropriate bidder with a right evaluation of Pantech … Being unable to take our duty and role as a company, we have decided to apply for the end of the normalization procedures.” – Pantech
The company has been steadily releasing Android hardware in select markets despite its instability, including as the rather good Vega Iron 2, but sales have remained sluggish for years. The company has seen its debts accumulate massively, partly due to its acquisition of a few smaller manufacturers that failed to return a profit. Pantech was placed under a five-year debt restructuring scheme in 2007, but has not managed to grab a foothold in the competitive smartphone market since.
Back in 2013, Samsung purchased a 10 percent stake in its rival, partly in an effort to help prop up the company. This seems to have been a rather poor investment with hindsight.
Pantech’s tangible and intellectual assets will be divided up among its creditors, if the court issues a liquidation order, and the company could be wound down in little over a month. Such is the competitive nature of today’s smartphone market.