Hanaro sees help coming

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Hanaro sees help coming

Hanaro Telecom Inc. said it expects to sign a deal with AIG and Newbridge Capital, perhaps next week, to receive a $500 million investment. The contract will become effective if Hanaro shareholders approve it at a meeting scheduled for Sept. 21. But the road may be bumpy, as LG Group, Hanaro’s largest shareholder, opposes the deal. LG, which wants to take control of Hanaro, is sticking to its plan for issuing 500 billion won worth of new shares domestically. If shareholders do not approve the deal, Hanaro, the second largest high speed Internet service provider in Korea, will have to pay $2.5 million in indemnity to the consortium. “To prevent Hanaro from having financial difficulties, we will sign the deal as soon as possible with the Newbridge-AIG consortium,” Hanaro’s president, Yoon Chang-bun, said. “We will make our best effort to persuade shareholders so that the deal can be passed at the meeting.” If LG continues to oppose the plan, Hanaro said it is ready to have a “voting war” against LG, planning to win support from small shareholders by sending e-mails and explaining why Hanaro must receive the money. “Hanaro’s plan to attract foreign investment was done ignoring the opinion of the largest shareholder. We will oppose the plan at the shareholders’ meeting,” LG said. If the deal goes forward, LG’s stake in Hanaro will decrease from 15.9 percent to 9.6 percent, while the Newbridge- AIG consortium will be the largest shareholder with a 39 percent stake. As a result, LG’s plan to become the third largest player in the telecommunications market after KT Corp. and SK Telecom Co. would face difficulties. Under the deal, Hanaro will issue 180 million new shares at 3,200 won each, which will be given to the consortium. The consortium agrees not to withdraw its investment for the next three years, but will replace five of the six outside directors on the board, which currently has 11 members. Mr. Yoon will remain a board member. Meanwhile, SK Telecom, Hanaro’s third largest shareholder, yesterday completed the purchase of 120 billion won of commercial paper that Hanaro issued last week. Hanaro avoided being placed under court receivership by using the funds to redeem $100 million worth of bonds with warrants that had matured. by Choi Hyung-kyu
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