Business

Wed Jun 25 18:36:15 PDT 2008

SEOUL (Reuters) –
A South Korean high court on Tuesday
rejected an earlier ruling that found U.S. private equity house
Lone Star (LS.UL) guilty of manipulating the stock price of a
former credit card unit to buy it cheaply.

"There is no evidence to prove Lone Star guilty of stock
manipulation," Koh Eui-young, judge of the Seoul High Court
said in a court ruling.

A lower court in February found both Lone Star and the head
of Lone Star's South Korean operations, Paul Yoo, guilty of
driving down the share price of KEB's former credit card unit
by spreading rumors to allow the bank to buy the unit at
below-market prices.

Dallas-based Lone Star, which bought KEB (004940.KS), the
country's No. 6 bank, for $1.2 billion in 2003, has denied any
wrongdoing.

The ruling, handed down after a one-week delay, is widely
expected to provide a catalyst to the stalled sale of Korea
Exchange Bank by Lone Star (LS.UL) to HSBC (HSBA.L) (0005.HK).

London-based HSBC last year agreed to buy control of KEB
for $6.3 billion, but said early this month that it might
consider dropping out of the deal unless regulatory approval
was given.

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner and
Louise Heavens)

Source: Reuters