Lone Star sends teaser letters for KEB sale-paper

SEOUL, April 6 (Reuters) - U.S. fund Lone Star [LS.UL] has sent teaser letters for sale of its $4 billion controlling stake in Korea Exchange Bank (004940.KS) to potential investors at home and abroad, Maeil Business Newspaper reported on Tuesday.

Lone Star sent letters to some 50 overseas investors, including banks and private equity funds, and 5-6 local candidates through sale lead manager Credit Suisse (CSGN.VX), the business daily said citing financial industry sources.

Credit Suisse declined to comment, whiel KEB officials said they had no knowledge of the sale progress.

South Korean banking groups including KB Financial Group (105560.KS) and Hana Financial Group (086790.KS) are widely expected to bid for Lone Star's 51 percent stake in KEB, South Korea's sixth-largest lender.

Among foreign investors, it is closely watched whether HSBC (HSBA.L) (0005.HK) will participate in the auction after an earlier failure to buy KEB. [ID:nTOE62A02I]

KEB shares were up 1.1 percent as of 0523 GMT against the wider market .KS11 down 0.2 percent, valuing Lone Star's 51 percent stake at around 4.5 trillion won ($4 billion). ($1=1122.0 Won) (Reporting by Rhee So-eui; Editing by Lincoln Feast)