S Korean movie theme park deal rescued
Two of South Korea's biggest companies, Posco and Lotte, have stepped in to rescue a $2.7bn deal to open a Universal Studios theme park in the country.
Plans for a movie-themed resort near Seoul were announced in 2007 but regional authorities admitted raising funds had proved difficult during the financial downturn.
Breaking the impasse, Universal Studios on Tuesday signed a financing agreement with Posco Engineering & Construction and Lotte Group, known for its retail and hotel empire.
Lotte will take a 27 per cent stake in the project and Posco 24 per cent. Building will begin in 2011 and the resort should open its gates in 2014.
South Korean authorities predict the Universal Studios park will be its largest in Asia. Film director Steven Spielberg, responsible for Jurassic Park, is expected to act as creative director. There will be a water park, golf course and shopping complex. Universal will also invest directly itself, but has declined to specify by how much.
Lotte already runs an amusement park in southern Seoul but its involvement in the Universal Studios venture will allow it to raise competitive pressure on Everland, South Korea's main theme park, run by Samsung Group.
Getting the park back on track is a coup for Gyeonggi-do, the often overlooked province surrounding Seoul, which expects the resort to create more than 40,000 jobs. The province is highlighting the resort's proximity to South Korea's main international airport at Incheon as a selling point that could attract foreign tourists, particularly from China.
Gaining foreign direct investment is always a stubborn challenge for South Korea but Soh Ji-young, aide to Gyeonggi-do's governor, said she hoped Tuesday's financing deal would entice some international investment.
In all, 15 companies will fund the project. The provincial authorities say they hope land prices can be agreed by next month.
Posco is also active in another flagship investment nearby, the ambitious construction work at Songdo to build a $35bn city on reclaimed mudflats off the west coast.
Posco holds a 30 per cent stake in the project managed by Gale International, a US company. Managers admit it has also been hard to attract foreign direct investment there during the downturn.
Lotte is also poised to play a role in expanding retail at Songdo and has entered into a partnership with Taubman Asia, a developer looking to build a mall there.