LG may sell headquarters in Seoul

LG is pursuing the sale of its Twin Tower Building at Seoul`s Yoido, which is a symbol of the group, and LG Kangnam Tower in Yoksam-dong. The value of the two buildings is estimated at about 1 trillion won.

LG executives said on August 2 that the group finds it vital to sell the real estate in order to cut its debt-to-equity ratio, which now stands at 260% to 270%, under the consolidated financial statement, and to shift into a pure holding company by 2003.

The officials added that LG had commissioned the sale of the building to 4-5 multinational real estate consulting firms, noting that they soon would name an agent for the projected sale.

The ostensible reason for the sale is to slash the group`s debt ratio, but industry sources say that LG needs to secure cash to participate in the next-generation IMT-2000 project, as well as to purchase 500 billion won worth of stocks in line with the merger between its electronics and information firms.

The group has no cash flow problem or any other financial trouble. Yet it must have thought that there was no reason to keep the real estate in order to concentrate its resources on future-oriented strategic businesses.

It is expected that LG might pursue a strategy of sale and lease back, selling the premises but then renting them from the new owner.