[THE INVESTOR] Hana Financial Group, a major South Korean banking group, is being sued for damages by US buyout fund Lone Star over its asset sell-off deal closed four years ago.

Lone Star’s affiliate LSF-KEB Holdings filed a 559.6 billion won (US$501.16 million) suit against the Korean firm with the International Court of Arbitration, Hana Financial said in a regulatory filing on Sept. 2. 

“The suit is related to LSF-KEB Holdings’ sale of a 51 percent stake in Korea Exchange Bank to Hana Financial at 3.91 trillion won in 2012,” the Korean banking group said.

Hana Financial said it will hire an attorney to strongly defend itself in the case.

While the grounds of the damage suit is unknown, industry experts speculated that it is related to the sale price of KEB which had cut twice between 2010 and 2011.

Line Star initially had attempted to dispose KEB to Hana Financial for 4.68 trillion won in 2010. But the deal size shrank to 3.91 trillion won in 2011’s final purchase agreement as the value of KEB’s shares declined during the period and the US PEF sought an immediate exit from the Korean market.

Separately, Lone Star had filed a separate multibillion-dollar suit against the Seoul government with the International Centre for Settlement of Investment Disputes in 2012.

The PEF demanded South Korea pay it nearly $4.68 billion, claiming it was forced to pay unfair taxes and suffered losses during the KEB sell-offs because of Seoul‘s delay in approving the contract.

South Korea rejects the claims, saying it has treated foreign investors in a fair and legitimate manner.

The fourth hearing of the case was held in The Hague in June and the final ruling is expected to be made next year.

By Park Han-na (hnpark@heraldcorp.com)