Woori $400 mln debt exchange offer mostly accepted

SEOUL, July 10 (Reuters) - Woori Bank, South Korea's No. 2 lender, said on Friday most existing holders of its $400 million subordinated bonds due 2014 had accepted its offer to exchange them with new higher-yielding debt.

Woori, a unit of Woori Finance Holdings (053000.KS), surprised investors in February with a decision not to exercise a buyback option for the junior-ranked debt, following similar moves by Deutsche Bank (DBKGn.DE) and Spain's Banco Sabadell (SABE.MC).

A Woori official told Reuters on Thursday the decision eventually helped the lender save $100 million to $200 million in costs, on the back of the global financial crisis.

As of the expiration date early Friday, a total of $389.2 million of the principal amount of the lower tier 2 notes had been tendered for the exchange, Woori said in an emailed statement, or approximately 97 percent of the total according to Reuters calculations.

The new lower tier 2 notes due 2015 will bear an interest rate of 7.63 percent per annum, above the 5.75 percent of the old notes maturing in 2014.

The existing junior issue, ranked somewhere between senior bonds and shares, was sold in 2004 and was typical of overseas subordinated debt transactions from Asia, with a maturity of 10 years, but callable at the mid-point.

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)