Posted November. 18, 2003 22:54,
Bond banks of LG may support LG Cards urgent fund needs of two trillion won, holding LG president Koo Bon-moos private assets as collateral. Also, measures are expected to take place for the normalization of Korea Exchange Bank Credit Service (KEBCS) by its major shareholders Lonestar and Olympus Capital as early as today. Financial Supervisory authorities noted that unless immediate steps are taken, KEBCS will have to be dishonored.
A high-ranking official at Woori Bank, LG Cards major bond bank, said, LG Group requested aid from Woori Bank, a sum of two trillion won, with an offer to hold security on Koos private assets, which include personal shareholdings and stocks of its subsidiaries, and we are looking onto this matter positively.
Woori Bank will make its final decision after a detailed examination of LG Cards financial position, including its CP maturity date.
The bond banks demanded LG Group to make an early payment of the one trillion won in additional funds for LG Card.
Meanwhile, with the immediate forecast for a downfall of KEBCS next week, KEBCS largest shareholder, Lonestar, and its second largest shareholder, Olympus Capital, have decided to address the situation by holding an emergency meeting regarding the issuance of new shares to be purchased and a possible merger of KEBCS. The results will soon be announced.
Relating to this, an official at the Financial Supervisory Commission (FSC) said, We are aware that the major shareholders of KEBCS have recently held several meetings to discuss the normalization of KEBCS, but there are still constraints in the negotiation between shareholders of the capital increase and merger of KEBCS, he said.
Although it is up to the major shareholders to reach a decision, if they do not, then we will have no choice but to dishonor KEBCS, the FSC official added, expressing the commissions position in this issue. At the extraordinary meetings, FSC announced that in the worst case, they will undergo contingency plans.
Meanwhile, with the news of difficulty in funding at LG Card, the financial market recorded a steep rise in bond interests Tuesday. Treasury bond interests with a 3-year maturity rose to 5 percent from 4.97 percent, and LG Card shares fell by 8.64 percent from a day earlier.