Italy opens theme park hailing film industry

Tong Yang’s future placed in further jeopardy

Tong Yang Securities posts record W318b net loss in 2013

kh close

 

Published : 2014-01-23 20:12
Updated : 2014-01-23 20:12

Korea Herald file photo

The future of embattled Tong Yang Group appears to have become even bleaker after its brokerage recorded a net loss.

The group is currently hoping to sell its securities arm to secure capital.

Shares in Tong Yang Securities plummeted Thursday, closing down nearly 9 percent at 2,355 won, reflecting the sell-off streak that emerged after the company said its total net losses for 2013 exceeded 300 billion won ($279 million).

The securities firm said overall sales slipped more than 40 percent to 1.07 trillion won in the nine months to December 2013, down from 1.8 trillion won in the same period of 2012. It posted a record 318 billion won net loss for the period, a big increase from 5 billion won in losses a year ealier.

“The deficit was mostly due to a prolonged recession in the securities market and in the loss of assets at our affiliated firms,” the company said in a statement filed to Korea Exchange.

Analysts said fund withdrawals and an exodus of customers in the wake of a financial default crisis at its parent firm Tong Yang Group were the main factors that drove the brokerage’s losses.

Three Tong Yang Group executives have committed suicide in the wake of the crisis.

On Thursday, the group said it would issue more than 71 million new shares to raise about 150 billion won.

The price of new shares will be nearly 42 percent of their par value, at 2,100 won per share, it said in a statement.

Insiders say the new share issuance is aimed at targeting the merger and acquisition market, as the troubled group is taking steps to sell off its brokerage arm.

Tong Yang International and Tong Yang Leisure, the brokerage’s two largest stakeholders, which together hold about 27 percent of the shares, are looking for possible buyers.

Market insiders estimate that the new shares will represent about 23 percent of the securities firm’s outstanding shares.

Despite the efforts, some say the sale of Tong Yang Securities will not be easy.

“The balance sheet shows why,” said Lee Chul-ho, a senior analyst at Korea Investment and Securities.

More worrying for the group, he said, is how to compensate the victims of fraud.

The company is under investigation for fraudulently issuing corporate bonds and commercial paper worth more than 2 trillion won since 2007, and improperly filing for court receivership for its five affiliates last October, inflicting heavy losses on investors.

Nearly 800 people filed a class action lawsuit against Tong Yang Group and the government this week, seeking compensation for losses incurred from the fraudulent issuance of commercial paper. They demand a combined 32.6 billion won ($30.6 million) in compensation from the firm and the financial authorities.

By Oh Kyu-wook (596story@heraldcorp.com)

Photo News

클라라 언더웨어, 구리빛 바디라인

이대생 미스코리아 진 완벽 몸매 화제

제시카 고메즈 속옷 화보 공개