Creditors of LG Card pondering joint takeover

SEOUL: Creditors of debt-laden LG Card Co Ltd are discussing a joint takeover of the company after failing to find a buyer for it, according to a bank official. 

“We think there is no other option but joint management,” Yoon Kyojoong, the chief operating officer of Hana Bank, said yesterday. “We can take over LG Card in the first place and sell it to a third party after stabilising it.” 

He said a proposed nationalisation of South Korea's largest credit card company was a remote possibility. 

Analysts said they expected eight lenders to replace the current management at LG Card and carry out a massive debt-for-equity swap and cash injection. 

Creditors have been discussing a two trillion won (US$1.67bil) debt swap that would make them the largest shareholders, although one report said the swap could amount to four trillion won. LG Card’s debt exceeds its assets by 3.24 trillion won. 

“No creditor bank can afford LG Card on its own, considering the size of LG Card’s debts,” said Cho Byungjun, an analyst at Shinyoung Securities. “LG Card will be able to wipe out its losses with a recapitalisation. But its recovery depends on how the economy performs.” 

Creditors missed a second deadline last Friday to find a bidder to rescue LG Card as no one had submitted a letter of intent. A deadline for formal bids expires today. 

Yonhap news agency reported that if no potential buyers emerged by Jan 7, when 700 billion won of loans owed by LG Card come due, creditors would jointly manage the company and extend four trillion won in a debt-for-equity swap. – Reuters  

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