Despite facing performance challenges, LG Display has initiated a large-scale financing program for the first time in five years through a syndicated loan in South Korea to fund capital investment. A syndicated loan is a medium and long-term loan provided by a group of lenders and is often used by companies to secure substantial funds under uniform conditions.
An investment banking (IB) industry report on Jan. 4 revealed that LG Display secured a $496 million (65 billion won) syndicated loan agreement on Jan. 22 with a consortium of lenders KDB (Korea Development Bank), the Export-Import Bank of Korea, and Shinhan Bank. This loan carries an interest rate based on the three-month CD (certificate of deposit) rate plus 1.6 percent, totaling a current rate of 5.4 percent. It is structured for repayment in two installments over three years.
LG Display drew down $153 million (200 billion won) on Dec. 28 and plans to draw the remaining $343 million (450 billion won) in the first half of this year. The funds from this syndicated loan are earmarked for investment in organic light-emitting diode (OLED) facilities.
Historically, LG Display has frequently utilized syndicated loans during financial challenges. The company secured syndicated loans of $760 million (1 trillion won) in 2012 and $610 million (800 billion won) in 2018 to bolster its liquidity. This strategy was adopted after LG Display posted seven consecutive quarters of losses from the fourth quarter of 2010 to the second quarter of 2012 and again in 2018, when it experienced a substantial 96.2 percent year-on-year decline in operating profit.
