LG TeleCom Induces 500 Billion Won Foreign Investment

LG TeleCom (LGT) succeeded in attracting 500 billion won (230 million pounds) in investment from British Telecommunications (BT). Lee Moon Ho, the President of LGT and Richard Slogrove, Managing Director of BT Asia Pacific signed the deal on October 1.
LG's share was lowered from 33% to 26.6% while BT became the second largest shareholder with a 23.49% stake. The transaction is likely to be completed within a month, and is contingent on the approval of LGT's shareholders. LG companies will retain about 27% of LGT, and will maintain their position as the largest shareholder in LGT and their principal management status in the company. BT will become the strategic investor and second-largest shareholder in LGT. The acquisition involves the issuance of new share of common stock.
BT's decision to invest in LGT was based on its recognition of LGT's leading edge CDMA technology and superior future growth prospects. LGT and BT first began discussions last March, with the boards of BT and LGT approving the deal on September 23 and September 25, respectively. LGT shareholders will meet to approve the transaction on October 14 in 1998.
Lee, President of LGT said, 'LGT has successfully completed its strategic goal of securing significant investment in our company. With BT, the leading telecommunications company in the world, as our partner, LGT has immediately enhanced its corporate value and position in the telecommunications market. LGT will leverage this new strategic partnership to expand its business opportunities through synergy, where possible, with BT's global business networks and LGT's CDMA technology.' Sir Peter Bonfield, Bt's Chief Executive, said, 'This is a significant investment in Korea's most dynamic telecommunications company. In the space of less than a year they have grown a customer base of about 1.5 million customers. Today's move gives BT an excellent strategic position in Asia's second largest telecommunications market.'
In order to raise additional capital to finance expanded operations, LGT has also just issued an underwriters bond of 400 billion won (approximately 180 million pounds). Together with the investment from BT this means LGT, with almost one trillion won in cash, is financially secure to aggressively expand its PCS (Personal Communications Service) operation in Korea. LG aims to receive a total of 6.5 billion dollars (9 trillion won) from abroad by selling business lines and attracting equity investors, thereby strengthening the financial condition of LG and raising foreign capital.