SK Corp. cuts bid for Inchon Oil Refinery

Eric Watkins
Senior Correspondent

LOS ANGELES, Oct. 28 -- South Korean refiner SK Corp. has reduced its bid for Inchon Oil Refinery Co. Ltd. by 160 billion won to about 3.04 trillion won, industry sources said.

In September, SK agreed to a total investment of 3.2 trillion won, including purchase of 1.6 trillion won worth of new shares issued by Inchon Oil and 1.6 trillion of new bonds from the refiner.

But sources said SK and the Inchon District Court recently reached an agreement that the refiner will instead buy 1.44 trillion won of bonds from Inchon Oil.

Inchon Oil has been under court receivership since March 2003 after going bankrupt in 2001. It operates a 270,000 b/cd hydroskimming refinery east of Seoul.

SK plans to sign a final contract to buy Incheon Oil next year after receiving approval from the South Korea's Fair Trade Commission, the country's antitrust agency, for the takeover.

With the purchase, SK will become Asia's fourth-largest refiner, with a refining capacity of 1.1 million b/d.

In January, creditors led by Citigroup Inc. rejected a 685 billion won offer from China National Chemical Import & Export Co. (Sinochem), China's largest chemicals trader, saying it was too low.

In August, a South Korean court instead chose a consortium led by SK as the preferred bidder for the sale of the refinery (OGJ Online, Aug. 19, 2005).

Contact Eric Watkins at hippalus@spidernet.com.cy.

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