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Capital Amount of LG Card to be Expanded

Posted November. 17, 2003 22:49,   


LG Group decided to put one trillion won more of capital into LG Card, which is in financial difficulty.

Accordingly, LG Card is expected to fairly overcome its current financial difficulty. In addition, even if it attracts more domestic or foreign capital, it is thought that LG Group will maintain the management rights.

LG Group announced that “it decided to put one trillion more of capital into LG Card, including a 300 billion won-scale capital increase with consideration, which is planned on December, by the first half of next year” on November 17.

Jeong Sang-guk, vice president of LG Group, said, “We will push ahead a scheme of LG Card’s attracting extra capital from domestic or foreign strategic investors along with the expansion of one trillion won of capital.”

The decision was allegedly made following the direction of Koo Bon-moo, the president of LG group and a large stockholder of LG card, for support by the conglomerate.

In regards to this, a high-ranking authority in Financial Supervisory Commission (FSC) said, “I know that the president Koo said he could offer his quota of the holding company LG as financial security if necessary.”

Until now, LG Card has one trillion won in capital, including 400 billion won-scale capital increase with consideration in the first half of this year and an issue of 300 billion won-scale convertible bond (CB) and bond with warrant (BW) in both July and August.

However, as the risk of liquidity arose with the accumulated deficit from January to September increasing to 1016.8 billion won, LG Card decided to implement capital increase with consideration of 37 million shares (300 billion won-scale) in mid-December.

And some anticipated that the right of management of LG Card could be handed over to Capital Group, the second largest stockholder, because LG Card is trying to attract a capital amount of $700 million from Capital Group.

An LG source said, “They will normalize management early by speeding up the time to get into the black through clearing insolvent assets and restructuring such as personnel cut along with expansion of capital.”