![flpantechvybe.jpg](https://www.cnet.com/a/img/resize/ceae8eff27f7f24fe9ccac35ff9562b0f910f489/hub/2014/06/05/5a796460-c551-4bf6-8c97-c1bf845d047c/flpantechvybe.jpg?auto=webp&width=1200)
Josh Miller/CNET
Korea’s number three handset maker Pantech has been given another lifeline after standing at the brink of bankruptcy due to the company’s immense debt. A group of Pantech’s creditors have agreed to extend the deadline for debt repayment by two years, interest-free, to July 25, 2016. This group largely consists of Korea’s three major carriers, SK Telecom, KT, and LG Uplus.
Pantech operates mostly in the domestic market, selling budget-friendly handsets to rival Samsung and LG’s flagship phones. The company also sells its phones (such as the Pantech Vybe , pictured above) in the US and Japan. Earlier this month, Pantech was scheduled to pay back $475 million in debt after facing staggering profit losses. If Pantech had to close due to bankruptcy, foreign smartphone makers stood a chance to gain a foothold in the very tight domestic South Korean market.
Before the deadline approached, most of Pantech’s creditors had agreed to a debt-to-equity swap. However, the three carriers were reluctant to concede, realizing that becoming stakeholders would mean pouring in more capital to the struggling company. Despite heavy pressure from the government and fellow creditors, the three carriers continued to delay their final decision and seemed to favor sending Pantech into bankruptcy.
At the last minute, Pantech managed to get the 3 carriers and 550 other companies that hold $215 million (£127 million, AU$ 230 million) in Pantech bonds to agree to a 2-year extension on repayment. With the vast majority of the bondholders complying with the request, SK telecom, KT and LG Uplus finally agreed to postpone the deadline.
While this maneuver gives the company a little bit of breathing room, there are several hurdles to overcome. Pantech was effectively left at a standstill and basically sold zero handsets since July 4, which was the original deadline for debt repayment.
Moreover, network operators are estimated to have around 600,000 units of unsold Pantech inventory. That number would have to decrease significantly for Pantech to see positive cash flow and its handsets distributing regularly again. Industry analysts have also pointed out that Pantech will have to borrow additional money to recover from almost-certain profit losses in 2014.