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South Korea's LIG Group said Tuesday it plans to sell all shares in its nonlife insurance arm in a bid to secure cash to compensate investors for losses incurred from its 2011 financial fraud scandal.
The conglomerate said it will sell its 20.96 percent stake, or 12.5 million shares, in LIG Insurance Co., while the acquirer has yet to be decided. Market watchers said the deal is estimated at 400 billion won ($378 million).
LIG Group said that the sale of LIG Insurance shares was inevitable, due to its need to secure cash to compensate investors who suffered losses from bad commercial papers (CPs), a type of short-term corporate debts, issued in 2011.
The announcement came after a court's order to compensate investors for issuing fraudulent CPs worth around 215 billion won
Koo Cha-won, the group's chairman, was found guilty by a Seoul court last year of orchestrating the fraudulent issuance under the name of the group's construction arm, LIG Engineering & Construction Co., even with prior knowledge that the firm had lost its ability to pay back its debt and was on the verge of coming under court receivership.
LIG Engineering & Construction filed for receivership in 2011 after suffering financial difficulties caused by a recession in the local construction business and growing project financing loans.
Shares of LIG Insurance were trading at 30,000 won as of 12:00 a.m. Tuesday, up 11.73 percent from the previous trading session. (Yonhap News)
The conglomerate said it will sell its 20.96 percent stake, or 12.5 million shares, in LIG Insurance Co., while the acquirer has yet to be decided. Market watchers said the deal is estimated at 400 billion won ($378 million).
LIG Group said that the sale of LIG Insurance shares was inevitable, due to its need to secure cash to compensate investors who suffered losses from bad commercial papers (CPs), a type of short-term corporate debts, issued in 2011.
The announcement came after a court's order to compensate investors for issuing fraudulent CPs worth around 215 billion won
Koo Cha-won, the group's chairman, was found guilty by a Seoul court last year of orchestrating the fraudulent issuance under the name of the group's construction arm, LIG Engineering & Construction Co., even with prior knowledge that the firm had lost its ability to pay back its debt and was on the verge of coming under court receivership.
LIG Engineering & Construction filed for receivership in 2011 after suffering financial difficulties caused by a recession in the local construction business and growing project financing loans.
Shares of LIG Insurance were trading at 30,000 won as of 12:00 a.m. Tuesday, up 11.73 percent from the previous trading session. (Yonhap News)
