영문 뉴스레터 가을호 091029-1 - yulchon...chemical detergent products, including the...

www.yulchon.com Korea TEL: +82 2 528 5200 Vietnam TEL: +84 8 3911 0225 1

YULCHON NEWSLETTER Autumn 2009

Deal Highlights | Yulchon advises ING Real Estate on the KRW 400 billion sale of ING Tower in

Yeoksam-dong, one of the highest value commercial office building transactions in

Korean history

M&A Team leads Lotte Group’s USD 60 million acquisition of controlling stake in

prepaid card provider Mybi Co., Ltd.

Corporate & Finance Team contributes to Delphi Group’s global restructuring under

Chapter 11 of the U.S. Bankruptcy Code

Finance Team advises on USD 1.344 Billion Financing Deal for deep-water oil

drilling vessels to be chartered in Brazil

Case Highlight | Yulchon obtains antitrust leniency status, reversal of KRW 6.6 billion in fines, and

avoidance of prosecution for leading beverage producer Donga Otsuka

Case Alerts | Criteria for determining whether a series of agreements to collude constitutes one

collusive act and the scope of products involved in collusion

Financial institution’s liability in forward exchange trading

Yulchon News | News

Seminars

People

Special Focus: Vietnam



Deal Highlights

Yulchon advises ING Real Estate on the KRW 400 billion sale of ING Tower in Yeoksam-dong, one of the highest value commercial office building transactions in Korean history

Yulchon’s Real Estate Team represented ING Real Estate and a consortium of prominent European and domestic investors in the KRW 400 billion sale of ING Tower in Yeoksam-dong to KB Asset Management’s Real Estate Private Equity Fund on August 7, 2009. The tower is a 25-story building (8 stories underground) with a gross floor area of approximately 67,000m², located on Teheran Street in the upscale Yeoksam-dong area of Seoul. Built in 1999, the office building is home to a number of companies including Hyundai Mobis.

This is the largest real estate deal to be closed in Korea since the start of the global financial crisis in the second half of 2008. It is also by some measure the fourth largest transaction in the history of office building sales in Korea. Yulchon advised the client on all matters throughout the transaction.

Since the second half of 2008, Yulchon’s Real Estate team has successfully closed transactions with an aggregate value amounting to KRW 1 trillion. In addition to the ING Tower transaction, these deals include the sales of the Samsung Card Building, the Hyundai Department Store and DMall at Bucheon, the Fraser Suites, and the Bundang Internet Telecommunications Center.

ING Real Estate was represented in this transaction by partners Bong Hee Han (Real Estate Team head) and Tong Chan Shin and associates Youn Nam Lee, Moon Sun Kyoung, Young Hur, and foreign attorney Julia Chang of Yulchon’s Real Estate team. Foreign attorney Ki Wook Kang of the Corporate & Finance team, senior CPA Sang Woo Song of the Tax Group, US-certified public account Mi Jung Lee, and Min Gyu Yoon of the Paralegal team (headed by Jin Gu Kim) also contributed.

M&A Team leads Lotte Group’s USD 60 million acquisition of controlling stake in prepaid card provider Mybi Co., Ltd.

Yulchon’s M&A team advised Lotte Group in its USD 60 million acquisition of 51% of Mybi Co., Ltd., a traffic card company, from UTC Investment, a Daesang Group affiliate. The acquisition marks Lotte’s entry into the growing prepaid electronic card market.

Yulchon’s advisory role in this transaction was more extensive than typical in such deals and included a substantial sourcing component. Partner Hee Woong Yoon and US-licensed attorney Kwon Do Kang contacted UTC before the sale and successfully persuaded UTC to accept Lotte Group as the preferred bidder.

The deal was led by partner Hee Woong Yoon of Yulchon’s M&A team, and senior foreign attorney Kwon Do Kang took part in the negotiations and in the overall coordination of the transaction. Associates Jin Kook Lee, Gun Kim, Byoung Sun Lee, Jung Keun Lim, Yoon Young Hwang and Bo Sung Jang performed the due diligence exercise of Mybi Co., Ltd. and review of the transaction contracts. Senior consultant Gi Ok Chang and associate Ki Deok Kwon successfully completed the antitrust report and approval procedures for the business combination.

Corporate & Finance Team contributes to Delphi Group’s global restructuring under Chapter 11 of the U.S. Bankruptcy Code

The global restructuring of the Delphi Group, a U.S.-based international automotive parts manufacturer, was recently completed with major contributions from Yulchon’s Finance Team. Under the relevant part of the reorganization plan subject to Chapter 11 of the United States Bankruptcy Code, Delphi Group transferred shares and assets of companies it had invested in around the Asia-Pacific region to DIP Holdco, founded by the Delphi Group’s creditors and General Motors.



Yulchon provided legal advice to DIP Holdco in connection with the transfer of shares of five companies Delphi Group owned in Korea and the steering business of the Delphi Group’s Korean subsidiary.

The global restructuring also involved Yulchon coordinating with a number of well-known international law firms operating in the Asia-Pacific region, including Willkie Farr & Gallagher in New York and Dechert Hong Kong.

The Finance Team worked in close cooperation with other practice groups to bring this deal together. Led by senior foreign counsel Hyo Young Kang, associate Jae Hyun Park and foreign attorney Hui Yeon Kim were involved in transaction management, while associates Ji Won Park and Ui Jae Lee, along with foreign attorney Ujin Ahn, also contributed with Jae Hyun Park at the working level. Senior Consultant Gi Ok Chang handled antitrust issues, while partner Sang Wook Cho and associate Kyu Sang Hwang addressed labor issues. CPAs Sang Woo Song and Jung Hwa Lee and foreign attorney Ju Eun Chung reviewed the tax law issues, while senior foreign counsel Hojin Chang and associate Jeong Hoon Hwang handled intellectual property issues.

Finance Team advises on USD 1.344 Billion Financing Deal for deep-water oil drilling vessels to be chartered in Brazil

Yulchon’s Finance Team represented the Export-Import Bank of Korea (KEXIM) in a structured finance project syndicated by BNP Paribas S.A., whereby KEXIM provided a direct loan in the amount of USD 165 million, as well as a debt guarantee in the amount of USD 135 million, in connection with the acquisition of two deep-water drill ships by Brazilian oil drilling operator Odebrecht Oleo e Gas, to be chartered to Petrobras, Brazil’s largest state-owned energy company.

This structured finance project involved 12 commercial banks in various jurisdictions and two export credit agencies, including KEXIM, and legal counsel in the jurisdictions of England, New York, Brazil and Korea. In this transaction, Yulchon engaged in extensive negotiations on behalf of KEXIM, leading to the successful close of the deal.

Senior foreign counsel Christopher Cho and foreign attorney Vicky Ji Yeon Kim acted on this deal.



Case Highlight

Yulchon obtains antitrust leniency status, reversal of KRW 6.6 billion in fines, and avoidance of prosecution for leading beverage producer Donga Otsuka

Yulchon’s Antitrust Team has successfully represented Donga Otsuka in obtaining leniency status and exemption from fines and prosecution in relation to price fixing allegations made by the Korea Fair Trade Commission (KFTC).

Suspecting that Lotte Chilsung, Haitai Beverage, Coca-Cola, Donga Otsuka, and Woongjin Foods jointly raised their beverage prices on four occasions, the KFTC launched an investigation into their activities in February 2009.

Yulchon, acting for Donga Otsuka, was the first to file a leniency application regarding the price fixing scheme and cooperate with the KFTC. However, the KFTC did not grant leniency status to Donga Otsuka, arguing that Donga Otsuka failed to submit evidence proving that “the companies reached a consensus at top-level meetings on the mutual need for price increases and subsequently decided on when and how they would increase the beverage prices.” Consequently, the KFTC initially imposed approximately KRW 6.6 billion in administrative fines against Donga Otsuka and issued an opinion in favor of prosecuting the concerned company and individuals involved.

Yulchon contested the KFTC’s measures, arguing that Donga Otsuka was involved neither in reaching the consensus for price increases at the top-level meetings nor in deciding the time and method of the increases. Yulchon also asserted that a company that is first to submit a leniency application should be granted leniency status as long as it provides all the facts available to it, given the extent of its involvement, rather than if it provides all the facts covering the entire cartel scheme, even when it did not have all such facts available to it. The KFTC ultimately accepted Yulchon’s arguments through a resolution adopted at its plenary session, accorded leniency status to Donga Otsuka, and exempted it from fines and prosecution.

Because many of the cartel cases investigated by the KFTC have been triggered by leniency applications, Yulchon’s success in this case for Donga Otsuka is significant for overturning the general perception that recognition of leniency status depends on the discretionary judgment of the KFTC.

The team advising Donga Otsuka was led by partner Sai Ree Yun and of counsel Sung Hwan Oh of Yulchon’s Antitrust Team. The team also included senior consultant Gi Ok Chang, partner Kumju Son and associate Joon Hwan Park.



Case Alerts

Criteria for determining whether a series of agreements to collude constitutes one collusive act and the scope of products involved in collusion

(Supreme Court Decision, June 25, 2009, Case No. 2008doo15621)

The Korean Supreme Court recently held that where companies have been involved in a number of collusive agreements over a long period of time and each agreement is based on the same intent to achieve an identical objective, then all of these collusive agreements may be viewed collectively as one single, unlawful collusive act.

The facts of the case were as follows: Four manufacturers of chemical detergent products, including the Plaintiff in this case, agreed to rig the prices of laundry detergents and dishwashing detergents on eight occasions from 1997 to 2005. Products relating to six of Plaintiff’s 18 brands were involved in the price-fixing. Originally, the Korea Fair Trade Commission (“KFTC”) decided that these price-fixing agreements constituted a single unlawful collusive act and imposed a fine on Plaintiff. Moreover, the KFTC used the revenues of all 18 brands to calculate the fine, rather than the six brands that were directly related to the price-fixing. Plaintiff appealed the KFTC’s decision to the High Court and then to the Korean Supreme Court.

The High Court ruled in favor of the Plaintiff, holding that each act of price-fixing was an arrangement to respond to changing market conditions and should not be viewed collectively as one single act based on an agreement of basic terms. (Seoul High Court Decision, August 28, 2008, 2007nu15621). The Korean Supreme Court reversed the High Court’s decision, holding that even though there was no agreement on the basic terms of price-fixing, such as how and by whom the price-fixing should be made, if each price-fixing agreement was based on a single intent to pursue an identical objective and had been continuously implemented, then each price-fixing agreement should be collectively viewed as one single, unlawful, collusive act. In addition, unlike the High Court

decision using the six brands that were directly related to the price-fixing as the basis for calculating revenue, the Korean Supreme Court used all 18 brands as the basis for calculating revenue, finding that the prices of brands other than the six brands will inevitably be influenced once the prices for the representative brands of laundry and dishwashing detergents are fixed.

In this decision, the Korean Supreme Court rejected case precedent establishing the requirement of an agreement on basic terms in order for a series of collusive acts to be found to constitute one single act. Instead, the Court has established a test that looks for the existence of a single intent to pursue an identical objective, regardless of whether an agreement on basic terms exists. Moreover, in determining the scope of the products to be considered, the Korean Supreme Court not only included the products directly related to the price-fixing, but also included the products that could potentially be influenced as a result of the products directly related to the price-fixing, thereby broadening the scope of the products to be included. In practice, this decision may invite controversies as to the scope of the products to be included and clients are advised to contact their legal advisors for assistance.

Financial institution’s liability in forward exchange trading

(Supreme Court Decision, July 9, 2009, Case No. 2007da90395)

The Korean Supreme Court has recently rendered a decision on the duties of a financial institution to its clients in the context of forward exchange trading.

In this decision, the Korean Supreme Court held that a financial institution breached its duty to protect its client when it failed to notify the client of a requirement to pay an additional loss deposit for forward exchange trading. (In this case, however, the Court also held that the client could not seek damages against the financial institution because the client already knew that it was required to pay an additional loss



deposit through other means and thus the financial institution’s failure to notify its client did not result in loss for the client.)

In addition, the Korean Supreme Court acknowledged that the financial institution’s job manual reflected a policy of unwinding forward contracts prior to the expiration of the contracts when the clients fail to pay additional loss deposits and losses are anticipated. The Court found, however, that the purpose of this policy is to deter highly speculative investments in the forward exchange market by clients, and for the financial institution to promptly recover the settlement amount of the forward exchange trade, thereby safeguarding against distressed assets. Thus, absent a specific agreement between the financial institution and the client or an exceptional circumstance where the loss of a client is not likely to be recoverable due to a clear indication of a decrease or increase in the exchange rate, a financial institution’s reverse trade to unwind the forward exchange contract at a specific time cannot necessarily be viewed as minimizing the client’s loss. Thus, the Korean Supreme Court held that a financial institution should not be viewed as having breached its duty to protect its client and the duty of care of a prudent manager simply because it did not immediately unwind the forward exchange contract through a reverse trade prior to contract expiration.

In this case, the client incurred losses on a forward exchange contract. Despite the financial institution’s stated policy of unwinding additional contracts in such situations, the financial institution anticipated that the exchange rate would bounce back, so it attempted to recover the loss of its client through additional forward exchange contracts. The Korean Supreme Court concluded that the financial institution did not breach its duty to protect its client and the duty of care of a prudent manager when it entered into additional forward exchange contracts, even if the financial institution violated its own policy stated in its work manual. This decision will provide meaningful guidance in determining whether a financial institution has breached its duty to protect its client and the duty of care of a prudent manager.



Yulchon News

NEWS

Asialaw Profiles 2010 names Yulchon a Tier 1 Law Firm in Corporate/M&A

Asialaw Profiles 2010, an annual international guide to the Asia-Pacific legal market, named Yulchon a Tier 1 law firm in Corporate/M&A law.

Asialaw said of Yulchon’s M&A team, “The team’s lawyers have specialty expertise in global approval and permit procedures, global finance, global securities and global taxation.” It added that “One of the biggest M&A deals last year saw the team advising KT Freetel on its US$17 billion merger with KT.”

Yulchon sponsors welcome reception for the International Association of Korean Lawyers Annual Conference

Yulchon exclusively sponsored the official welcome reception for attendees of the International Association of Korean Lawyers (IAKL) 17th General Assembly on October 22 at the Westin Chosun Seoul.

Managing Partner Chang Rok Woo and IAKL Chairman Dae Youn Cho made opening remarks at the reception, which was co-hosted by many other attorneys from Yulchon.

At the conference, partners Sai Ree Yun and Young Hill Liew hosted the Corporate Law and Patent Law sessions, respectively. Senior foreign counsel Soo Jeong Ahn gave a presentation on tax law, and partner Sang Wook Cho presented on Korean labor law.

Yulchon launches its new and improved website

Yulchon welcomes clients to its new and improved website, launched in September.

To facilitate foreign clients’ access, Yulchon’s remodeled website is now available in Chinese, Japanese, Russian, and German in addition to Korean and English.

The design of the website has also been refreshed for easier access to information.

You can visit our new website at www.yulchon.com.

SEMINARS

The 7th In-House Congress Seoul 2009 (Aug. 19)

The 7th In-House Congress, organized by Pacific Business Press and co-hosted by Yulchon, was held at the Westin Chosun Seoul on August 19, 2009.

Yulchon lawyers – partner Sai Ree Yun, tax specialist Dr. Kyung Geun Lee, and senior foreign counsel Soo Jeong Ahn and foreign attorney Joseph Hong – spoke on “Hot Topics from Recent Developments in Korean Tax Law” at the Tax Session, which Yulchon has co-hosted for several years



This year Yulchon’s Human Resources Team also co-hosted the event, and partners Hee Chul Kang and Sang Wook Cho gave a joint presentation entitled “Select Issues in Korean Labor Law,” which covered matters that frequently arise in labor practice, including: (1) early retirement, (2) dismissal for underperformance, (3) non-compete clauses, and (4) prohibition of discrimination against non-permanent workers.

Yulchon and Caplin & Drysdale host seminar on Korea-US Advance Pricing Agreements

Yulchon’s Tax Group and Caplin & Drysdale, a U.S. law firm specializing in cross-border taxation and transfer pricing, co-hosted the “Seminar on Korea-US Advance Pricing Agreements: A Time-Tested Approach for Uncertain Times” on October 15 at Oakwood Premier COEX Center. It was attended by more than 100 delegates from the business sector.

The featured speakers from the U.S. were attorneys John M. Breen, former head of transfer pricing at the U.S. I.R.S., and Patricia Gimbel Lewis. Yulchon tax experts, including Cross-border Taxation Team leader Dr. Kyung Geun Lee, drew on their extensive experience in government and private practice to explain the Korean side of the Advance Pricing Agreements process.

YULCHON PEOPLE

Yulchon welcomes new senior foreign attorney Edward U. Kang

Senior foreign attorney Edward U. Kang joined Yulchon in September. He brings to Yulchon extensive experience representing and advising foreign and domestic clients in cross-border transactions, particularly M&As and securities offerings.

Mr. Kang previously practiced law in the New York office of Cleary Gottlieb Steen & Hamilton and at Kim & Chang in

Seoul and was an investment banker with Credit Suisse and Morgan Stanley in their respective Seoul offices. Mr. Kang was also a management consultant with the Seoul office of McKinsey & Company.

A member of the New York and California Bars, Mr. Kang is a graduate of the University of California, Los Angeles. He obtained his J.D. degree from the New York University School of Law.

Sai Ree Yun appointed as Competition Policy Advisor to the Korea Fair Trade Commission (Aug. 14)

Partner Sai Ree Yun of Yulchon’s Antitrust Team has been appointed as a competition policy advisor to the Cartel Subcommittee of the Korea Fair Trade Commission. The Subcommittee aims to reform anticompetition regulations, regulate competition-restricting mergers and acquisitions, advance a market economy, and realize consumer rights.

Dong Soo Kim appointed as Policy Advisor to the Ministry of Public Administration and Security (Aug. 19)

Dong Soo Kim, a partner in Yulchon’s Tax Group, was appointed as policy advisor to the Ministry of Public Administration and Security on August 19. The ministry has been actively pursuing projects to revive the Korean economy, among other initiatives. As a policy advisor to the ministry, Mr. Kim will work to advance the Korean provincial tax system, the basis for provincial autonomy.

Hee Chul Kang speaks about setting up off-shore funds at the Korea Asset Management Summit 2009 (Sept. 24-25)

Yulchon partner Hee Chul Kang spoke on the topic of “Setting Up an Onshore Fund for Foreign Entities” at the Korea Asset Management Summit 2009, held at the Shilla Hotel on September 24 and 25. Top executives of prominent asset management companies here and abroad, including Bloomberg, Prudential Asset Management, and Aberdeen Asset Management Asia, attended the two-day event.



Five Yulchon lawyers honored as 2009 Asialaw Leading Lawyers

Yulchon partners Sai Ree Yun, Hee Chul Kang, Dong Soo Kim, Young Seok Lee, and Sae Youn Kim have been named Leading Lawyers for 2009 by Asialaw, a leading legal magazine in Asia. They were selected based on a survey of over 9,500 corporate executives, in-house counsel and lawyers in private practice.

Partners Sai Ree Yun was named a leading lawyer in Competition/Anti-Trust practice, Hee Chul Kang in M&A, Dong Soo Kim in Taxation, and Young Seok Lee and Sae Youn Kim in Dispute Resolution.

SPECIAL FOCUS: VIETNAM

Yulchon’s Vietnam and Southeast Asian practice continues to grow rapidly, with many recent developments. As a result, this issue of the newsletter includes a special Vietnam focus.

Yulchon’s Vietnam Office finds a new home

To provide more efficient services and support to clients investing in Vietnam and other Southeast Asian regions, Yulchon established a branch office in Ho Chi Minh City, Vietnam in August 2007. Our Vietnam and Southeast Asia operation has grown and expanded, so we have moved to a new office. Details are below. Please note, however, that the telephone and fax numbers remain the same.

New Address: Unit 03, 4th Floor, Kumho Asiana Plaza, 39 Le Duan St., Ben Nghe Ward, Dist.1, Ho Chi Minh City, Vietnam

Tel.: +84-8-3911-0225 Fax: +84-8-3911-0230

Yulchon sponsors the Quang Nam Investment Forum 2009 (Sept. 8 & 10)

At the request of the Vietnamese Embassy in Korea, Yulchon sponsored the Quang Nam Investment Forum 2009 held in Seoul and Busan on September 8 and 10, respectively.

The Vietnamese Embassy and the Korea Chamber of Commerce and Industry co-hosted the forum, which focused on the Quang Nam region of Vietnam, on September 8. On September 10, the event was jointly held by the Vietnamese Embassy and the Korean Small & Medium Business Administration and Small & Medium Business Corporation.

High-ranking officials from the Vietnamese Ministry of Planning and Investment and Quang Nam City, along with the Vietnamese ambassador in Korea, introduced Quang Nam’s investment project and explained the administrative benefits to be offered regarding issuance of approval or licenses related to investment. The forum also featured a program for sharing the experiences of existing Korean investors in Quang Nam.

Yulchon signs an MOU with Quang Nam’s Chu Lai Open Economic Zone

Yulchon held a signing ceremony of a memorandum of understanding (MOU) for cooperation with Quang Nam’s Chu Lai Open Economic Zone (OEZ) on September 11, 2009.

The ceremony, held at Yulchon’s Seoul office, was attended by the Party Secretary of Quang Nam, Nguyen Duc Hai, the Vice Commissioner of Quang Nam People’s Committee and representative of Chu Lai OEZ, Le Phuoc Thanh, and Yulchon’s Managing Partner, Chang Rok Woo.

Located on the mid-southern shore of Vietnam, Quang Nam’s Chu Lai, the first open economic zone in Vietnam, encompasses Vietnam’s exclusive free trade district, industrial parks, tourism resorts, and administrative and residential quarters.

www.yulchon.com Korea TEL: +82 2 528 5200 Vietnam TEL: +84 8 3911 0225

10


Chu Lai OEZ is offering a variety of benefits to foreign investors, including tax benefits and administrative support in obtaining approvals or licenses.

With the MOU in place, Yulchon will be able to not only strengthen its standing in Vietnam but also deliver more in-depth and valuable legal services to our clients on matters regarding Vietnam.

Representatives from Vietnam’s Ministry of Planning & Investment visit Yulchon

Yulchon’s Seoul office welcomed 15 representatives from Vietnam’s Ministry of Planning & Investment (MPI) on September 22.

Yulchon and the Vietnamese group, which included MPI Vice Minister Nguyen Bich Dat and Commercial Attaché at the Vietnamese Embassy in Korea, Hien, had a meeting on cooperation and a formal dinner hosted by Yulchon to welcome the guests.

The representatives and Yulchon’s Managing Partner Chang Rok Woo discussed how the two parties will foster amicable cooperation between Yulchon and Vietnam, and further between Korea and Vietnam. Joining them were Yulchon’s of counsel Tae Ik Chung; senior advisors Dae Hee Yun and Ji Chul Oh; partners Bong Hee Han, Soon Moo Soh, In Bo Song, Young Hill Liew, Sae Youn Kim; associate Yong Geun Bae, and tax specialist Sang Woo Song.

Vice Minister Nguyen Bich Dat stated that the imminent task facing Vietnam is expansion of its social infrastructure. And, as part of suggestions for cooperation in human resources, he requested Yulchon’s assistance in amending Vietnamese regulations including BTO and BOT and streamlining Vietnam’s investment rules. Also, the vice minister promised to offer strong assistance in troubleshooting problems that Yulchon’s clients may have in investing in Vietnam.

Material included in our newsletter has been prepared for informational purposes only and is not offered as legal advice on any particular matter. Yulchon and contributing authors disclaim all liability for the newsletter’s content and are not responsible for any third party contents which can be accessed through this newsletter.

Yulchon, Attorneys at Law

Textile Center 12F, 944-31 Daechi 3-dong, Gangnam-gu 135-713 Korea

Tel : +82-2-528-5200 Fax : +82-2-528-5228

E-mail : [email protected]

Yulchon Vietnam

Unit 03, 4th Floor, Kumho Asiana Plaza,

39 Le Duan St., Ben Nghe Ward, Dist.1, Ho Chi Minh City, Vietnam.

Telephone: +84-8-3911-0225 Fax: +84-8-3911-0230

영문 뉴스레터 가을호 091029-1 - yulchon...chemical detergent products, including the...

Documents