Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (41995)	11/23/2003 10:30:17 PM
From: Jim Fleming	Read Replies (1) \| Respond to of 74559

Jay TEOTWAWKI Print LG Card Wins $1.7 Bln Rescue From Woori, Creditors (Update4) Nov. 24 (Bloomberg) -- LG Card Co., South Korea's largest credit-card company, got a 2 trillion won ($1.7 billion) loan from Woori Bank and seven other creditors to avoid bankruptcy after consumer defaults soared. The card company, which had a loss of 1.02 trillion won in the first nine months, won an extra year to repay debt from the banks, said Kim Ki Rin, a spokesman at Woori Bank. Koo Bon Moo, Chairman of LG Group, the nation's second-largest industrial group, used his stakes in group companies as collateral. LG Card is the fourth credit card company in Korea to receive support as the number of people missing debt payments for at least 90 days rose to 3.5 million in September. Korea's bonds and shares fell on concerns credit companies may need more funds, threatening the viability of the nation's banks. ``The bailout will only solve LG Card's cash shortage problem till the first half of next year,'' said Kim Nam Ik, who manages the equivalent of $2 billion of fixed-income funds at Mirae Asset Co. in Seoul. ``Without solid signs of improvement in its earnings and delinquency ratios, it's unlikely financial institutions will want to lend more money.'' LG Card shares dropped as much as the daily permissible limit of 15 percent to 7,570 won and traded at 7,790 at 11:50 a.m. in Seoul. Shares of LG Investment & Securities Co., which owns 6.1 percent of the card unit, fell 6.5 percent to 9,210 won. Shares of LG Corp., the parent company which owns 12 LG Group units, were down 4.2 percent to 8,780 won. The company's bonds have rarely traded since March when Korean credit card issuers began to struggle to honor their debts. Suspending Services Shares of Woori Finance Holdings Co., which owns Woori Bank, fell 4.3 percent to 6,460 won at 10:04 a.m. in Seoul. Shares of Kookmin Bank dropped 1.1 percent to 41,150 won. LG Card, which suspended cash advances to all customers since Friday afternoon, will resume the service as early as this afternoon, company spokesman Kim Byung Cheul said. The company, which had a fourth straight loss in the third quarter, owes 24 trillion won, including 1.4 trillion won due by Dec. 31, and 11 trillion won due in 2004. LG Card's loans overdue for at least 30 days rose to 10.57 percent of all credits in September from 9.8 percent in August, based on Financial Supervisory Service standards. The number of South Koreans missing debt payments in September for at least 90 days rose for a 15th consecutive month to 3.5 million, according to the Korea Federation of Banks. The eight banks agreed to reschedule LG Card's debt for one year on condition it raises 1 trillion won of capital by selling new shares in the first half of next year. Thirty-four trust companies met today to discuss the extension of LG Card's debts, according to the Korea Investment Trust Companies Association. Cutting Staff LG Card suspended cash advance services for three hours Friday afternoon and during the weekend, saying it ran out of money. LG Card said the company will increase its efforts to save money, including cutting employees. The collateral LG Corp. Chairman Koo offered includes a 5.46 percent stake in LG Corp., a 4.4 percent stake in LG Investment & Securities Co. and a 16 percent stake in LG Card, which are worth 355 billion won, based on Friday's stock prices. Koo's stake in LG Corp. is the key to control over other units. LG Card will also offer 10.4 trillion won worth of its receivables to the creditor banks as collateral, Woori said. Banks can write down the LG Card shares offered as collateral and swap the 2 trillion won of loans into new shares should it fail to honor the debt, Kim said. LG Card plans to raise 1 trillion won of new capital in the sale of 300 billion won of new shares by the end of this year, and another 700 billion won of new shares by March next year. LG Investment Securities Co., LG Group Chairman Koo and his family members own a combined 27.1 percent of LG Card, while Capital Group Cos. has 11.1 percent, the card company said. Woori Bank is aiding LG Card's bailout along with Kookmin Bank and six other creditors. National Agricultural Cooperative Federation and Kookmin Bank will provide almost half the funds. Korea Exchange Bank last week said it will take over publicly traded Korea Exchange Bank Credit Service Co. Last Updated: November 23, 2003 21:54 EST Jim