LG Display plans $1 bn rights offering for smaller OLED biz

LG Display Co., the world’s top manufacturer of large-size organic light-emitting diode (OLED) panels, said on Monday it plans to raise 1.36 trillion won ($1.05 billion) through a rights offering in South Korea to invest in growing smaller product lines such as tablet PCs and automobiles for a turnaround.

LG Display decided to sell 142 million shares at 9,550 won apiece, about a 22.4% discount from Monday’s closing of 12,310 won. The loss-making South Korean company is set to allow its major shareholders such as LG Electronics Inc. with a 37.9% stake to subscribe to the offering first while selling the rest to other investors.

“We aim to enhance the business stability and improve earnings through the fundraising,” said LG Display Chief Financial Officer Kim Sung-hyun.

The move came as LG Display logged 589.2 billion won in operating losses during the third quarter, extending its deficit streak to a sixth straight quarter.

The company announced the plan after the South Korean stock market closed. But its shares tumbled 6.1%, far underperforming a 0.1% gain in the benchmark Kospi.

IPADS, CARS

Despite the financial stress, LG Display needs to invest more in smaller OLEDs with Apple Inc.’s plan to use the panels for its iPad series from next year.

The display maker of South Korea’s fourth-largest conglomerate LG Group had initially been expected to supply some 5 million OLED panels, about 60% of total screens for the iPads. But the panel manufacturer may need to offer more as its competitors failed to meet Apple’s quality tests, industry sources in Seoul said.

LG Display has already been shifting its business focus to smaller panels from large products for TVs with smaller models accounting for 76.6% in the third quarter.

LG Display is expected to use a portion of the proceeds for automotive OLED panels as the company is increasing customers with its tandem OLED panels, which are brighter with better durability.

The company’s automotive business is likely to turn to the black next year, given its order backlogs topping 20 trillion won.

Some analysts said the company may reduce debts with the offering. Its debt-to-equity ratio more than doubled to 322.2% as of end-September from 158.5% at the end of 2021 as its net debt surged by some 5 trillion won during the period with its borrowings-to-total assets ratio up to 46.8% from 33.4%.

LG Display, however, plans to focus more on the smaller OLED panel business with the fundraising, officials said.

“We may use most of the money for capital expenditures, although we could use some for debt repayments,” one of them said.

The company is predicted to swing to an operating profit of 89 billion won in the fourth quarter, according to a market consensus forecast. In 2024, it is likely to log a 102.2 billion won profit for the first time in three years.

Write to Jeong-Soo Hwang at hjs@hankyung.com
 
Jongwoo Cheon edited this article.