The Korea Herald


LGE’s new shares sale seen as success

By Korea Herald

Published : Dec. 23, 2011 - 16:20

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Hope rises for company to turn around next year on LTE, home appliances

LG Electronics, the world’s No. 3 handset maker, is currently in the process of successfully listing their new shares in the market, raising expectations that the firm may see a turnaround next year.

The company said on Friday that the subscription rate in the first stage of its new share selling process ― offering the new shares to its existing stakeholders ― recorded 97.77 percent. The process, which was conducted for two days from Dec. 20-21, also included 20 percent of new shares given to its company employees.
CEO Koo Bon-joon CEO Koo Bon-joon

Each new share of LG Electronics is worth 51,600 won, lower than its previously expected pricing of 55,900 won. The remaining 2.23 percent of new shares will be open for subscription purchases until next Monday before they get listed on Jan. 9, according to an LG official.

LG has issued 19 million new shares worth about 1 trillion won for the first time in six years to finance facility investments and other capital expenditures for 2012.

“We believe the company’s issuance of new shares is a complete success as it is told that the process can be labeled a success if the subscription rate for purchase of new shares goes over 60 percent,” said an LG official. “We’re expecting the subscription rate to reach 100 percent by Monday.”

Analysts say it was not only the lower-than-expected pricing of new shares, but the fact that LG is projected to perform better next year, especially with its strength in smart gadgets that run on the fourth-generation Long Term Evolution network.

Noh Geun-chang, a senior analyst at HMC Securities, said LG is likely to make a turnaround in the first half of next year by having the upper hand in LTE smartphones and home appliances.

In a related effort, LG Electronics’ telecom affiliate LG Uplus is taking the lead in introducing the LTE handsets in the market, stating it will become the first in the country to provide nationwide coverage of 4G LTE networks.

LG Electronics is also likely to offer a new lineup of smartphones next year adding to hopes that it will step up and get out of the red as the No. 3 global player in the mobile phone market.

“LG Electronics has not yet released a well-spotted handset this year, but the company will get back on track next year by rolling out an array of new products,” said Park Kang-ho, an analyst at Daishin Securities. “The company’s television sector will also improve in terms of profit with the launch of London Olympics.”

LG Electronics has reported losses for six consecutive quarters with its mobile phone division alone reporting a loss of 138.8 billion won in the third quarter of this year. Together with its decision to finance the firm’s operations through capital increases, three well-known credit rating agencies have either downgraded the credit rating of LG Electronics or cut its outlook this year.

By Cho Ji-hyun (