“We maintained our innocence throughout this process, and are pleased today to have the court's confirmation. We hope that now we can all put this behind us and get back to business,” said Lone Star chairman John Grayken in a statement.
In February, The South Korean Central District Court found Lone Star guilty of manipulating the stock price of the credit card division of the Korea Exchange Bank, in order to acquire the division on the cheap shortly after paying $1.2 billion for a 51 percent stake in the bank in 2003.
Lone Star and the Korean Exchange Bank were fined W25 billion ($26 million; €18 million) each. Lone Star’s South Korea country head, Paul Yoo, was sentenced to five years in prison.
Lone Star was poised to make an enormous profit on its investment in the bank at the end of 2006, when it agreed to sell its stake to Kookmin Bank for $7.3 billion. But by then the deal had attracted government scrutiny of the conditions surrounding the 2003 buyout forced Lone Star to cancel that agreement. Last August Lone Star looked set to sell its stake to HSBC for $6.3 billion, a deal that was stalled by the earlier verdict.
In April, Lone Star and HSBC agreed to extend the deadline for completing the transaction from 30 April to 31 July. If the approval of regulators is obtained prior to the 31 July, the completion deadline will be extended to two months following the date of approval.
The case may not be over yet as prosecutors said they will appeal the case to the Supreme Court, according to Yonhap News Agency. South Korea's financial regulator said it will continue to delay giving its approval for the sale of KEB to HSBC.
In a separate case, Lone Star faces charges that it colluded with members of the South Korean government and the Korea Exchange to exaggerate the bank’s financial troubles in 2003 in order to buy the bank at a lower price.