NEW YORK & LONDON--(BUSINESS WIRE)--Whitebox Advisors LLC (together with its affiliates, “Whitebox” or “we”), a long-term shareholder of LG Corporation (KRX: 003550) (“LG” or the “Company”), today announced that leading independent proxy advisory firms Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co., LLC (“Glass Lewis”) have recommended that LG’s shareholders vote AGAINST the proposed spin-off of a newly created holding company comprised of LG’s direct and indirect holdings in LG Hausys, LG MMA, Silicon Works, LG International and Pantos (the “Spin-Off”).
As a reminder, Whitebox previously announced that it intends to vote AGAINST the Spin-Off at LG’s General Meeting of Shareholders scheduled to be held on March 26, 2021 (the “General Meeting”). Whitebox has been advised that the General Meeting’s agenda will be released in English on March 15, 2021 and further understands that many international shareholders may have a voting deadline of March 17, 2021. Whitebox encourages shareholders interested in voting to plan accordingly to ensure that their votes are tabulated. We invite LG shareholders to view our recently-released presentation here and connect with us by visiting www.ABetterLG.com.
In its full report, ISS affirmed Whitebox’s opposition to the Spin-Off:1
- “Overall, considering the diverse operations of the spinoff entities and absent any potential synergies, the strategic rationale of combining these assets into a new listed company appears questionable.”
- “Despite stating that the spinoff is in the best interest of shareholders, the board has failed to articulate a clear business rationale for combining ownership stakes in publicly listed companies and unrelated wholly owned subsidiaries in a newly listed company.”
- “The statement about the post-spinoff exchange of shares between family members has fueled suspicions that the proposed transaction is merely aimed at addressing issues with succession planning inside the founding family.”
- “[…] the proposed spinoff has exacerbated concerns about the fair treatment of all shareholders.”
- “In conclusion, it appears that the proposed transaction lacks a compelling business justification and does not address the most pressing issues related to capital management and the enormous discount to NAV at which shares of the parent company trade.”
In its full report, Glass Lewis also affirmed Whitebox’s opposition to the Spin-Off by noting:2
- “Having undertaken a detailed review of the arguments presented by both parties, we believe Whitebox presents the more compelling case to LG Corp shareholders.”
- “[…] Whitebox’s suggested alternatives to the proposed spin-off — i.e., establishing an independent corporate governance committee and implementing a capital management plan — are reasonable requests that could benefit all public shareholders and should be actively considered by the board.”
- “In our view, the board's proposal fails to show how the creation of a smaller conglomerate in NewCo […] could be reasonably expected to address the Company’s significant and persistent conglomerate discount at LG Corp.”
Simon Waxley, Head of Equity at Whitebox, commented:
“Whitebox is very pleased that ISS and Glass Lewis recommend shareholders vote against LG’s planned Spin-Off. Both ISS and Glass Lewis echoed our views regarding LG’s concerning lack of focus on implementing a practical capital management plan and working to narrow the Company’s persistent valuation gap. To be clear, Whitebox wants to see LG transform into a stronger, well-governed conglomerate that delivers enduring value for all shareholders and stakeholders. The first step in doing so – in our view – is for LG to abandon this ill-conceived Spin-Off. LG’s Board of Directors should begin prioritizing better corporate governance, improved investor communication and the implementation of a credible, transparent capital management policy that can help remedy the Company’s staggering trading price discount.”
Whitebox is a multi-strategy alternative asset manager that seeks to generate optimal risk-adjusted returns for a diversified base of public institutions, private entities and qualified individuals. Founded in 1999, Whitebox invests across asset classes, geographies, and markets through the funds, vehicles and institutional accounts we advise. The firm manages approximately $5.5 billion in assets and maintains offices in Minneapolis, Austin, New York, London and Sydney.
This communication should not be construed as asking or soliciting shareholders of the Company to authorize Whitebox or any third party to exercise their voting rights on their behalf with respect to the proposals to be presented to shareholders of the Company at the 2021 General Meeting of Shareholders (the “Meeting”). Whitebox is by no means soliciting or requesting other shareholders to grant or deliver their proxies to Whitebox for the Meeting.
1 Permission to quote ISS was neither sought nor obtained. Emphases added.
2 Permission to quote Glass Lewis was neither sought nor obtained. Emphases added.