Creditors get tough with LG Semicon
Korean spat takes on European dimension as banks pull rugs
Reports from South Korea said that financial sanctions will now be imposed on LG after its refusal to accept a merger deal in which Hyundai will have 70 per cent of a new semiconductor company. LG (formerly Lucky Goldstar) is one of the top five chaebols (family concerns) in South Korea.
The others are SK, Hyundai, Daewoo and Samsung. According to English language newspaper The Korea Times, 28 institutions will recall loans from LG Semicon during the course of this week. And the action could take on a European dimension very shortly, as LG has bridge loans of over 80 billion won.
As exclusively reported here on 11 December 1998, LG has already rationalised its structure in the UK. The action, prompted by the South Korean government, furious at LG’s intransigence on the deal, was precipitated when the Commercial Bank of Korea and the Korea Exchange Bank refused to loan LG Semicon any money and proposed selling off collateral unless it pays its debts.
Faced with this action, LG has been attempting to accumulate foreign dollars to bolster its position but it is unlikely to be able to stall for much longer. LG Semicon has a number of fab plants worldwide, including one in Wales, which is partly funded by the Welsh Office, a department of the UK government.
That government department is now bound to be asked how much UK tax payers’ money is being used to bolster LG Semicon’s position. ®