LG.Philips Display Unit Files Bankruptcy
HONG KONG, Jan. 27, 2006 -- LG.Philips Displays Holding BV announced today that due to worsening conditions in the cathode ray tube (CRT) marketplace and unsustainable debt, the holding company and one of its Dutch subsidiaries, LG.Philips Displays Netherlands BV, and its subsidiary in Aachen, Germany, have all filed for bankruptcy. The holding company also announced it will not be able to provide further financial support to certain loss-making subsidiaries because it has been unable to obtain funding.
LG.Philips Displays Holding BV is the European holding company for LG.Philips Displays (LPD). Given the holding company's inability to further fund the subsidiaries, its operations in France, Czech Republic, Slovakia, Mexico and the US are also reviewing their financial position, it said in a statement. In particular, it said, the workers council of LPD France has been summoned to consider seeking insolvency protection at the plant in France.
LG.Philips Displays emphasized that its plants in Brazil, China, Indonesia, Korea and Poland are, in principle, unaffected. The company said its factories in the UK (Blackburn) and the Netherlands (Stadskanaal and Sittard, with support from some employees in Eindhoven) are "economically viable" and are expected to continue production, for which LPD will seek support and approval of the Dutch trustee and supervisory judge. These operations represent more than 85 percent of LPD's production capacity, employing approximately 15,000 people.
Over the past year, the company said, it and other CRT manufacturers have seen an unprecedented decline in the market for CRTs, especially in Europe. The demand for new flat panel TVs, including LCD and plasma televisions, has surged dramatically as they have dropped in price and become cost competitive faster than was anticipated. Although demand for CRTs has dropped precipitously in mature markets, global demand for CRTs remains strong, especially in emerging markets, it said.
The company said it has been in extensive discussions with the company's financiers and parent companies, Philips and LG Electronics, over the past several months to explore financial solutions to the market challenges, especially in Europe. However, it said these negotiations were ultimately unsuccessful.
As a result of the insolvency filings, approximately 350 employees at the company's operations in Eindhoven and 400 employees in Aachen are affected.
"We deeply regret this outcome and the painful impact these filings will have on our valued employees and the communities that have supported us over the years," said J.I. Son, president and CEO of LPD. "Unfortunately, market conditions and our financial situation have made this very difficult decision unavoidable."
LPD employees are being informed of these changes and of their plant's financial position by local management.
"Having explored all possible restructuring options, we really had no choice but to take these actions. We are working to maintain employment for our remaining employees through our ongoing operations," said Son.
LPD said it will work with its customers to ensure continued support to their businesses by providing backup supplies from LPD's ongoing operations, and that it will continue to work with suppliers to its ongoing plants and operations. Suppliers delivering parts and components to the affected plants will be notified in accordance with local legislative requirements.
The company, which produces one in every four TV and computer monitor tubes sold, said it will continue to be committed to the CRT industry.
For more information, visit: www.lgphilips-displays.com