Posted December. 21, 2004 22:55,
As LG Group rejected creditors demand to swap LG Card debt for equity, creditors of LG Card decided to consider recollecting the LG Corp.s shares held by LG Group Chairman Koo Bon-moo, which is 5.46 percent of the total shares of LG Corp. The creditors had taken the shares as collateral, but later gave them back to the chairman.
Regarding the creditors decision, LG Group said, The creditors knew about the need for an increase in additional capital, but did not talk about it. As they talk about it at the last minute, it is absurd to say that LG Group alone should hold the responsibility. This comment shows the possibility of increasing conflict between LG Group and creditors.
The creditors meeting will be held tomorrow to discuss comprehensive responses to LG Group, said Choi Yong-soon, chief representative of creditors at Korea Development Bank on Tuesday. Recollection of Chairman Koos shares will also be discussed.
Chief Representative Choi explained, We are considering collecting Chairman Koos shares as LG Group did not fulfill its promise to swap 500 billion won worth of bonds to convertible bonds.
The reason that the lenders are talking about the extreme measure of recollecting Koos shares is that LG Group officially rejected creditors demand for a 770 billion won minimum debt-to-equity swap.
Chairman Koo gave 14,482,617 LG Group shares, or 5.46 percent of the corporations shares, in security in return for the creditors bailout of two trillion won when LG Card faced liquidation crisis in November last year.
Creditors drew up a confirmation sheet with LG Group this January and promised to return all of the chairmans shares when LG Group fulfills its promise. They returned the shares when LG Group bought 1.175 trillion won worth of corporate bonds and commercial paper in late March.