Pantech to File for Bankruptcy This Week
Published on: 11th Aug 2014
South Korea's struggling mobile phone manufacturer, Pantech plans to file for bankruptcy again this week after its latest attempt to stave of receivership failed.
The company, which was bailed out again only a few weeks ago had publicly called on the country's three mobile networks to buy more of its phones, but says that it had received little support in that direction.
"The situation won't get better as local carriers refuse to accept our repeated pleas to purchase Pantech mobile phones. Pantech plans to file for bankruptcy with a Seoul court next week," a spokesman at Pantech told The Korea Times.
It currently has supplier debts of KRW20 billion that it cannot repay to local component suppliers, although it managed to persuade them to delay repayments to give it more time for a turn around.
The three mobile networks also agreed to extend the repayment terms for the debts that Pantech owes them, and at zero interest on the debt, but that seems to have been insufficient to stave off the long expected inevitable closure of the phone manufacturer.
Pantech had been asking for a debt for equity swap, but the mobile networks were unwilling to agree to that, possibly aware of how previous such deals have left creditors with a stakes in a rapidly shrinking company.
The firm has limped along for several years, largely supported for political reasons to ensure that components suppliers have alternatives to the mighty Samsung in their dealings. Even Samsung stepped in at one point to prop up the company, recognising the dangers of a monopoly situation.
Pantech insists that the departure will limit "consumer choices" in Korea and has tried to leverage that to secure support for a bailout.
The firm is now seeking a possible buyer, either a Chinese or Indian handset vendor ahead of the eventual collapse of the firm.