Korea's Fair Trade Commission has restricted all Korean conglomerates
from issuing cross-debt, repayment guarantees. This action may restrict LGE from guaranteeing future Zenith credit agreements.
This new restriction can be positive for both LGE and Zenith. Both LGE and Zenith will benefit from additional equity (as well as tech and marketing) partners similar to the recently announced 5% equity stake Sony obtained in NextLevel (General Instruments), for $188 million.
Something could be up in Glenview along these lines. Kevin Brindley, IR spokesperson and Asst. Treasurer and Roger Cregg, CFO, are remaining in Glenview during the CES to work on something "BIG", according to Glenview sources.
One possible scenario: Additional equity stakes in Zenith by one strong European or Japanese company, or both. Ericsson, Siemens, Matsushita and Mitsubishi are all possible equity investor candidates which could bring much to the Zenith table. This would be a possible four-way split among LGE, Zenith minority shareholders, one Japanese company and one European company. Zenith would issue additional common shares, reducing minority shareholder's stake to 25%, and, LGE would sell the appropriate number of shares to reduce its stake to an identical 25%. The two additional equity partners would have a similar 25% stake. The advantages of cross: R&D, marketing, designing, manufacturing, distributiing with four major technological powers united together to meet the challenges of this new digital era are quite obvious. No other CE company in the world, including Sony and Thomson, could match the wealth of talent/resources of such a Zenith alliance.
The era of additional debt and cross-debt guarantees to both LGE and Zenith is coming to an end. Equity partnerships, when well structured, offer a mutually beneficial deal for all concerned. |
