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January 29, 2006 3:59 pm

LG Philips European unit seeks insolvency

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LG Philips Displays, the world’s largest manufacturer of television cathode ray tubes, underscored its precarious financial position when its European holding company was declared insolvent as a result of worsening demand and unsustainable debt.

The Hong Kong-based company, a joint venture between Philips of the Netherlands and Korea’s LG electronics, said on Friday it could no longer honour certain debts, and that it had also sought court protection for its Dutch subsidiary and German affiliate in Aachen.

LG Philips Displays, which makes 25 per cent of the world’s cathode ray tubes for TVs and computers, said its European holding company “would not be able to provide further financial support to certain loss-making subsidiaries because it has been unable to obtain sustainable new or additional funding”.

Units in the Czech Republic, France, Slovakia, Mexico and the US were also reviewing their financial position, it added, with French workers already having been warned to expect insolvency. About 750 jobs are affected by the insolvency filings, the company said.

The crisis stems from what LG Philips called “an unprecedented decline” in the market for CRTs, especially in Europe.

It blamed the increasing attractiveness of flat-panel TVs, both LCD and plasma, as the price differential narrowed. That trend led its parents to write off the value of stakes in the joint
venture.

 

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