The suit, against LG Corp, the holding company of LG Group, and the conglomerate's chairman Koo Bon-moo, has been filed at the Seoul Central District Court.
Korea-based Vogo Investment Group claims it was party to an IPO plan for LG Siltron, a semiconductor wafers business within LG Group. Vogo says the IPO was initiated and approved in a board meeting of the company in June, 2010. It claims Koo subsequently cancelled the IPO plan and caused Vogo to withdraw its investment.
“Afterwards, LG Siltron’s performance worsened due to over-support for its sister companies, and the changed market environment made the IPO impossible, causing us damages and preventing us recovering our investment and liquidating it,” Vogo said in a statement.
The investment group also plans to request access to files related to LG Siltron’s decision to reduce its 6-inch sapphire wafer business. It claims LG knew the market demand was for 2-inch and 4-inch wafers, but went ahead with 6-inch to meet demand from affiliate LG InnoTek.
LG Group calls Vogo’s claim “absolutely false”, and says it will take every legal measure to defend itself.
The conglomerate claims the decision to cancel LG Siltron in 2011 was caused by the extremely unstable market environment at that time, due to the earthquake in Japan, Europe’s recession, and the falling credit rating of the US. It says it believed the stock market at that time couldn’t handle LG Siltron’s volume, so proceeding with the offering would have caused unfair damages to small shareholders.
“LG Corp, the majority shareholder of LG Siltron, agreed with the assessment of its subsidiary,” said LG Group in a statement, and said Vogo agreed with the decision to withdraw the IPO at the time.
Source: ZDNet Korea (zdnet.com.kr)