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LG intensifies efforts to block deal for
Hanaro
SEOUL - LG Group, South
Korea's second-largest business conglomerate, has
intensified its efforts to torpedo a US$500 million deal
for the take over of Hanaro Telecom Inc offered through
a foreign consortium led by US insurance giant American
International Group (AIG).
On Wednesday, LG
officials confirmed that AIG has been in separate
negotiations with six foreign investors including
Goldman Sachs Group, Carlyle Group and Japan's Softbank
Asia Infrastructure Fund to induce them to invest more
than $500 million in Hanaro.
"Significant
progress has been made in the talks with the foreign
investors," said Yoo Won, an LG spokesperson. He added
that The move by LG is the latest step in its efforts to
strike down the AIG-led deal, which is still subject to
approval at a Hanaro shareholders' meeting on October
21.
LG, the top shareholder in Hanaro with an
18.07 percent holding, hopes to revive its troubled
telecom affiliates, like Dacom and LG Telecom, by
connecting them with Hanaro's 2.97 million Internet
access subscribers.
But LG's plan is on the
verge of collapse as Hanaro, which is also saddled with
mounting debts worth more than 2 trillion won ($1.73
billion) as of end of June, sealed the contract with the
AIG-led foreign investors.
In addition, the deal
has been backed by the Korean government, providing a
further obstacle to LG's efforts.
Information
and Communication Minister Chin Dae-je said he welcomes
the foreign capital injection for normalizing
debt-ridden Hanaro, warning that the company could go
into court receivership if shareholders reject the deal.
Other major Hanaro shareholders such as Samsung
Electronics and SK Telecom have also expressed
opposition to LG's plan to acquire the company.
LG has allegedly asked to purchase a stake in
Hanaro at more than 3,200 won per share, a price higher
than that offered to the AIG-led consortium.
To
keep management control in the broadband operator, LG
plans to join in the investment by purchasing more than
$250 million worth of Hanaro shares.
Analysts,
however, remained cautious on LG's chances of winning a
deal with the foreign investors, questioning LG's cash
reserve.
"It's uncertain how LG will raise the
money to purchase the Hanaro shares," said an analyst at
a local brokerage. "Normalizing Hanaro and Dacom is
expected to require cash injections of more than 2
trillion won, so foreign investors will have doubts over
LG's liquidity," the analyst added.
(Asia
Pulse/Yonhap)
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