September 25, 2000 in Social Responsibility News

The participation of Samsung Electronics in SGC's rights offering

1. Motivations leading to SGC's current rights offering



- Due to instability of the Korean economy and internal problems within SGC's negotiating
partner, SGC has failed to induce foreign capital. The failed negotiation was intended to be
a part of the "Petrochemical Bigdeal", which is being driven by imf and the Korean
government for "Chae-Bol" restructuring.
Because SGC failed to meet an agreed upon deadline (sep. 2000) for self-restructuring,


- SGC will likely face financial sanctions imposed by the government. In order to avoid
sanctions,which will jeopardize SGC's liquidity and possibly even its future, SGC has decided
to pursue a twenty two (22) billion won rights offering.


Consequences of financial sanction: no allowance of new credit lines, credit withdrawal, and suspension of financial activities.



2. The share of Samsung Electronics



- Application DATE : Sept. 28. 2000

- The number of shares 833,634

- Payment 8.34 BILLION WON

(10,000 per share : issue at the par value)



3. Samsung Electronics current motivation and future plan regarding SGC



Financial sanctioning of SGC would target all Samsung groups's divisions -- including Samsung Electronics -- such sanction on Samsung Electronics could result in fatal consequences. Thes possibilities are outlined below.



- Difficulty in trade finance (export receivable discount-$20 billion and letter of credit-$10
billion annually for securing key components)

Investment on semiconductors was ill-timed.

Soaring financial costs and unstable maintainance of international credit lines due to
degrading of our credit rating. Samsung Electronics could face a complete stop in
purchasing, production, and marketing.



However, SGC's management has improved its financial status and it can be in a better position to induce foreign capital upon completion of a successful rights offering.





 
1999
2000


Profit
△44 billion won
32 billion won


Debt Ratio
360%
191%





For the reasons above Samsung Electronics will be participating in SGC's rights offering.



After listing SGC, Samsung Electronic's share of SGC stock will be offered at 19,470 won;
this appraisal was determined after analysis by 5 different foreign evaluation companies



SGC's financial results and forecast





 
1999
2000


REVENUE
1,309
1,730


MARKETING PROFIT
196
279


(%)
(15.0)
(16.1)


EBITDA
324
416


NET INTEREST EXPENSE
261
232


ORDINARY PROFIT
△63
46


NET PROFIT
△44
32


TOTAL ASSET
2,876
2,550


TOTAL LIABILTY
2,251
1,673


LOAN
(2,250)
(1,396)


EQUITY CAPITAL
625

877


DEBT RATIO
360%
191%




- Year 2000 b/s produced are based on an internal forecast and sales of assets worth
250 billion kwn.

Other petrochemical companys' marketing profit ('99)dow 7%, mitsui 4.3%,
domestic "a" 10%, and "b" 7.1%



Evaluations of SGC made by foreign institution





institution
net enterprise value
value per share(won)
DATE


ADL
1,232
25,700
'99.03


SRI
910
18,960
'99.03


IFC
1,045
21,770
'99.09


D사
770
16,040
'99.10


A사
715
14,600
2000.06


AVERAGE
934
19,470
 


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