You've heard of Pantech, right? They have released some low-end and mid-range phones here in the States. Believe it or not, they are the third largest phone manufacturer in South Korea, behind Samsung and LG. They sold a whole bunch of their Vega Note devices overseas, but even with that they are on the verge of declaring bankruptcy.
Pantech has already filed not one, but two debt restructurings, the most recent back in February. In two days, they'll have to pay back debt of 480 billion won ($475 million) that they owe to quite a few different creditors. Some of the companies to whom they owe money include South Korea's three biggest cell network operators; KT, LG Uplus, and SK Telecom. Pantech owes SK Telecom 90 billion won ($89 million), and they owe LG Uplus and KT 45 million won ($44 million) each. Pantech doesn't have any money to pay any of this back, though. They posted operating losses of 292 billion won ($289 million) last year and 6.7 billion ($6.6 million) for Q1 of 2014. They haven't made money in a long time, and now they have to pay back billions of won.
Pantech has pushed back the repayment on their debts a couple of times. They restricted their debt back in February, and that's when the repayment date of July 4was set. The banks and financial institutions that are owed money have agreed to convert their 300 billion won ($296 million) from debt into Pantech equity, but the three telecomm carriers have said they remain undecided about which way to proceed. Pantech is hemorrhaging money. Would you want to keep pouring investment dollars into a failing company?
Another issue is that if the wireless carriers swap their debt for equity in the company, they will also have to infuse more capital into Pantech. They will probably also face a capital reduction, giving them less equity than what they are actually owed. It's a tough situation. If the carriers decide they want their money instead of equity, Pantech will have to file bankruptcy. That leaves all of the company's investors with the headache of liquidating Pantech's assets. No fun.