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Creditors to Sell Troubled LG Card

January 13, 2004

SEOUL, South Korea (AP) _ Creditors of South Korea’s biggest credit card company, LG Card, will sell their stakes in the troubled firm next year after orchestrating a 4.8 trillion won ($4.1 billion) bailout with government help last week, South Korea’s vice finance minister said Tuesday.

Vice Finance Minister Kim Gwang-Lim called the rescue package for LG Card ``inevitable″ because a bankruptcy would have undercut South Korea’s fragile economic recovery.

LG Card Co., affiliated with South Korea’s third-largest conglomerate, LG Group, narrowly avoided default last fall, rattling investor confidence in the country’s card companies and the stability of its financial markets.

The company had to suspend lending services before a group of 16 creditors organized a last-minute bailout plan on Friday that staved off the firm’s failure and averted a blow to the world’s 12th-largest economy.

The state-run Korea Development Bank helped broker the deal by agreeing to provide additional assistance of up to 500 billion won ($424 million) if the company falls into another cash-flow problem within a year.

Kim called the move ``inevitable″ in a Tuesday interview with PBC Radio. A quarter of all South Koreans own a credit card issued by LG Card, he noted, and the company’s assets amount to 24 trillion won ($2 billion).

Creditors intend to sell the company next year after it stabilizes, he added.

LG Card has an outstanding debt of around 21 trillion won ($17.8 billion).

Last week, Finance Minister Kim Jin-Pyo said the economy would incur losses of at least 27 trillion won ($22.9 billion), if LG Card were to go bankrupt.

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