Sale of LG Card Run into Difficulties

The auctioning off of LG Card Co, a defunct credit card company, has run into difficulties as none of the creditor banks has submitted a letter of intent by the time of the deadline expiration on December 23 at 5:00 p.m. Creditors set a new deadline for December 26.

They also decided to convert one trillion won in debt into equity as a new sales condition and to bring in 800 billion won to improve liquidity from the card issuer’s parent, LG Group.

“Although the deadline is over now, new bids will still be possible if we readjust terms and conditions attached to debt and reduce the required capital injection,” said a source close to the creditors.

“The buyer of LG will have to pay one trillion won for acquisition and inject another one trillion won to meet the eight percent equity capital ratio under law,” said Woori Bank, a major creditor, adding, “No creditor banks willingly bid for LG as it is unlikely that the company will turn such a profit.”

LG creditors had planned to allow banks with a letter of intent to conduct feasibility studies on LG. With no letters being submitted, they will have to reschedule the process.

Financial regulators concluded that the eight major creditors may bid in the auction scheduled for December 30 if they agree to skip the submission of a letter of intent.

“If the sale of LG falls apart, we will negotiate new terms with LG Group,” said Woori Bank president Lee Duk-hoon in a press conference on December 23, adding, “If the Korea Development Bank has to acquire LG because there are no bidders, it will negotiate directly with the group for new conditions.”

Keuk-In Bae bae2150@donga.com