LG, Carlyle woo Hanaro

LG Group said yesterday that it has joined forces with Carlyle Group, a U.S. investment fund, in a power struggle to gain control of Hanaro Telecom. Hanaro is a high-speed Internet service provider, the second-largest in Korea, but has been cash-short for some time and is enmeshed in a struggle for management control. LG said that it and Carlyle would jointly invest 700 billion won ($600 million) to purchase Hanaro shares at 3,300 won per share. Hanaro’s board of directors had accepted the firm’s plan to sell its controlling interest, nearly 40 percent, to a consortium led by American International Group and Newbridge Capital for $500 million. The planned purchase price was set at 3,200 won per share. The decision is to be voted on by shareholders at a meeting scheduled for Oct. 21. “We will vote down the plan to attract investment from the AIG-led consortium at the meeting,” an LG official predicted. LG is currently the largest stakeholder in Hanaro, controlling 18 percent. It has been locked in a struggle with other investors in the firm to obtain management control, and has blocked other rescue attempts for the embattled firm. Hanaro made it clear that it opposes LG’s plan, saying that if its efforts to attract capital from AIG-Newbridge Capital consortium were thwarted at the upcoming shareholders meeting, it would have no choice but to seek court receivership. by Kim Hyo-jin