Dec. 29 (Bloomberg) -- LG Card Co.'s former owners offered a third of the 770 billion won ($740 million) that creditors of South Korea's second-largest credit card company are demanding to keep it afloat.

LG Group's units, which formerly owned LG Card, may contribute as much as 264.3 billion won ($254 million) toward a bailout, the Seoul-based group said today in a statement. Creditors of the card company should fulfill pledges made in January and provide the remainder of the 1.2 trillion won bailout package, South Korea's second-largest industrial company said.

Creditors, led by Korea Development Bank, want LG Electronics Inc. and other group companies to swap LG Card debt for equity in its second bailout in a year. LG Group companies said creditors should contribute more to the latest bailout because they hampered earlier fund-raising efforts.

LG Group's announcement comes a week after it relented to a request from creditors that its companies shoulder part of the new bailout, which follows a 5.1 trillion won package last January. Creditors said yesterday they will let the card company go bankrupt unless LG Group units joined the bailout plan by today.

LG Card delayed a board meeting to discuss a plan to increase its equity capital to 9 p.m. from 6 p.m.

Laah Chong Gyu, an executive director at Korea Development, which manages LG Card for creditors, wasn't immediately available to comment.

Early Redemption

LG Group said creditors in January caused a delay to the sale of LG Investment & Securities Co. shares owned by its units, which resulted in the sale raising 78 billion won, or 272 billion won less than planned. Creditors should provide funds to cover the shortfall, the group said in its statement.

LG Card needs the funds by the end of the year to meet capital rules and avoid being downgraded by credit rating companies. Holders of 2 trillion won of its bonds can demand early redemption immediately should its ratings be lowered.

LG Electronics and other group companies offered 1.175 trillion won in short-term loans and bonds as part of an earlier package. LG Group had told creditors that its subsidiaries wouldn't be able to convert all the 770 billion won of debt into equity, indicating they could consider the conversion of a smaller amount.

LG Group reiterated the bailout should be handled through ``fair and rational'' methods that would appeal to all creditors, according to the e-mailed statement today.

Before LG Group's announcements, shares of LG Card closed 3.4 percent higher to 15,200 won in Seoul.

To contact the reporter for this story: Sangim Han in Seoul at sihan@bloomberg.net

Last Updated: December 29, 2004 03:59 EST