LG warns group may pull out of telecoms

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LG warns group may pull out of telecoms

LG Group has delivered an ultimatum to shareholders of Hanaro Telecom Inc. to support its 500-billion-won ($424-million) capital-increase plan. The warning came as a consortium led by American International Group Inc. made a new offer to invest $254 million in the nation’s second-largest broadband internet service operator. A previous offer of $450 million was rejected early last month. Shareholders will vote on LG’s proposal on Thursday. “If [LG’s] capital-increase plan for Hanaro Telecom is not approved at the shareholders meeting, I will suggest to LG Group that it withdraw from the telecom business,” Jung Hong-shik, head of LG Group’s telecom operations, said at a press conference yesterday. Mr. Jung also warned that if LG’s plan was vetoed by shareholders, “It would be difficult either to resume the already-vetoed foreign investment plan or for Hanaro to take out additional loans, meaning its future would be put in jeopardy.” Industry analysts said the threat stemmed from a realization that LG’s plan was unlikely to get shareholder approval. Other shareholders, such as Samsung Electronics Co. and SK Telecom Co., are skeptical of LG’s offer, which will need a two-thirds majority vote to pass. LG Group holds just 15.89-percent of Hanaro. by Cho Min-guen
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