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Chairman Koo Offers His Shares of LG Co., Ltd as Mortgage

Chairman Koo Offers His Shares of LG Co., Ltd as Mortgage

Posted November. 20, 2003 22:46,   


According to the financial industry and LG Group, LG Group chairman Koo Bon-moo promised yesterday to mortgage his share of LG Co., Ltd, which totals 5.46 percent (14,482,617 shares), to a team of bank creditors in order to receive financial aid of two trillion won in funds for the normalization of LG Card.

If LG Card does not pay back the funds from the creditors in time, chairman Koo’s share of LG Co., Ltd, which has been put up as mortgage, will be repossessed, a circumstance that would have serious effects on LG Group’s management rights and its control of the organization.

Financial authorities have also confirmed this fact and added, “If LG Card’s financial crisis is not settled prior to the first half of next year, it can be said that LG will no longer be chairman Koo’s company.”

LG Card’s creditors, which comprise 8 banks including Woori Bank, settled on the allotment of two trillion won yesterday afternoon with the promise that chairman Koo will offer additional mortgage.

The financial aid offered by each bank is the following:

National Agricultural Cooperative Federation (NACF): 5,140 billion won; Kookmin Bank: 4,370 billion won; Korea Development Bank: 2,878 billion; Woori Bank: 2,463 billion won; Industrial Bank of Korea: 1,686 billion won; Hana Bank: 1,297 billion won, and Shinhan Bank: 1,136 billion won.

LG has hinted that besides the 10.4 trillion won in shares, card trade receivables and subordinated bonds held by LG Card, chairman Koo’s share of the finance affiliated firms of LG Card and LG Investment & Securites Co., Ltd, will also be put up as mortgage.

The creditors stood firm, saying, “The present value of chairman Koo’s share of the financially affiliated firms has dropped immensely, and if additional mortgage is not promised, such as the holding company’s share in chairman Koo’s possession, it will be difficult to provide new funds,” resulting in what appears to be a backwards step by LG.

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