LG Electronics Said to Raise $884 Million in New Share Sale; Stock Plunges
LG Electronics Inc. (066570), reeling from losses at its panel and mobile-phone units, plans to sell new shares worth 1 trillion won ($884 million) to raise capital for investments, according to a person with knowledge of the plan.
LG will make a statement on the proposal after the stock market closes for trading in Seoul at 3 p.m., said the person, who declined to be identified because the information isn’t public. South Korea’s stock-market operator today asked LG to issue a statement on “rumors about a new share sale” by 6 p.m.
The world’s third-largest mobile-phone maker slumped the most in more than three years in Seoul on speculation about the share sale, the first since the company raised 636 billion won in a 2005 offer, according to data compiled by Bloomberg. LG, whose handset unit has been unprofitable for six straight quarters, is introducing new smartphones after losing market share to Apple Inc. (AAPL) and Samsung Electronics Co.
Sally Lee, a spokeswoman for Seoul-based LG, declined to comment.
The company tumbled as much as 11 percent to 63,300 won, the biggest intraday drop since Oct. 24, 2008. It changed hands down 9.8 percent as of 1:35 p.m. in Seoul.
Affiliates LG Corp. (003550) fell 8.8 percent; LG Innotek Co., a light-emitting diode maker, lost 7.7 percent; and LG Display Co., the world’s second-largest liquid-crystal-display maker, plunged 8.1 percent.
Fitch Ratings on Nov. 1 lowered the outlook on LG Electronics to “negative” from “stable,” saying the company’s operational competitiveness is unlikely to recover in the short term.
Last month, Moody’s cut the outlook for LG’s Baa2 issuer and senior unsecured debt rating to “negative” from “stable.” Standard & Poor’s lowered the long-term corporate credit and senior unsecured debt ratings to BBB- from BBB.
The share-sale plan was previously reported by Dow Jones and appeared on the Wall Street Journal’s website.
To contact the reporter on this story: Jun Yang in Seoul at firstname.lastname@example.org;