South Korean firm LG Display’s proposal to increase registered capital at their project in Hai Phong by US$90 million has been put on hold as their financial plan is ‘not convincing enough’, according to the finance ministry.
LG Display Vietnam Hai Phong, the Vietnamese unit of South Korea’s LG Display Co. Ltd, has sought permission to increase registered capital in its display-making plant in the northern port city to $1.59 billion from the current $1.5 billion.
The facility, which broke ground in Hai Phong’s Trang Due Industrial Park in 2016, is expected to produce OLED screens for smartphones, smartwatches and tablets.
The management board of the Hai Phong Economic Zone has consulted the Ministry of Finance on the request of the South Korean firm, with the latter ordering that the proposal not be approved “until the investor presents a sound financial plan for the capital increase.”
According to the finance ministry, LG Display’s equity in the current $1.5 billion in capital registered to the Hai Phong project is only $100 million.
The South Korean firm is also unwilling to increase its own equity despite the increase in capital investment.
This means that 100 percent of the additional $90 million in capital proposed for the project would come from outside loans, which Vietnam’s finance ministry believes “could lead to an unhealthy financial status, unstable production and uncertainty in business activities.”
According to the finance ministry, Hai Phong authorities should request that the South Korean company adjust their financial plan for the capital increase in a way fit to hike its own equity in the plant.
Also, in its initial proposal, the South Korean investor failed to include financial statements of LG Display Vietnam Hai Phong for 2016, nor the parent firm LG Display.
Consequently, the finance ministry has also requested that these two documents be submitted so that it can properly evaluate the financial capacity of the firm and decide whether the plan to increase capital investment should be approved.