Lee Jae-yong[Photo by Yoo Dae-gil = dbeorlf123@]
Shares of South Korea’s Samsung Engineering rose sharply on Tuesday after the heir apparent of Samsung Group Jay Y. Lee pledged to save the engineering unit struggling with debt and mounting losses.
Samsung Group said on Monday that Jay Y. Lee, son of group patriarch Lee Kun-hee and vice chairman of flagship Samsung Electronics Co Ltd, will buy up to 300 billion won worth of shares to be sold by affiliate Samsung Engineering Co Ltd should existing shareholders not fully take up the firm's 1.2 trillion won rights issue. Jay Y. Lee will acquire the shares on the same terms as all other shareholders, the group said.
Samsung Engineering Co, the country’s largest engineering company, posted a net loss of more than 1.33 trillion won in the third quarter, its biggest quarterly loss in at least six years.
The company cited delays on work in Saudi Arabia, the United Arab Emirates and other projects.
The company laid off hundreds of workers over the past year and announced the right issue plan in October.
Samsung Engineering intends to sell shares for 1.2 trillion won to existing shareholders, more than double its current market capitalization. The company also plans to sell its headquarters building, which has a value of 350 billion won.
The right issue plan comes amid renewed speculation of a merger with Samsung Heavy Industries.
Samsung Group planned the merger last year to help the companies better compete with global engineering giants but scrapped the 2.5 trillion won merger after some investors asked the companies to buy back the shares they held. According to regulations in Korea, a company can call off a merger if buyback requests reach a level that could increase its financial burden.
By Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
