Shares in LG Electronics plunged early Thursday amid market talk that the world's No.3 handset maker was planning a rights offer worth some 1 trillion Korean won ($891.4 million).
There are rumors in the market LG Electronics is seeking a share issuance, said Kim Do-han, an analyst at Samsung Securities.
The rights offer is said to be worth around 1 trillion won ($891.5 million), another market source who declined to be named said.
The firm is planning a board meeting on the possible offer soon, according to media reports.
The Korea Exchange has asked LG to clarify the talk.
An LG spokesman told Reuters he was looking into the rumors.
Shares in LG Electronics dropped 11 percent to 63,300 won, the lowest level in five weeks, compared with the broader market's 1.1 percent fall as of 0108 GMT.
Market insiders said LG Electronics may be seeking to raise money to fund struggling affiliates such as LG Display or a merger and acquisition deal.
LG Display, which has been posting losses, needs fresh facility investments and LG Electronics as the top shareholder may need to pitch in, said John Park, an analyst at Daishin Securities.
LG Electronics controls around 38 percent of the world's No.2 flat panel maker, which posted a record quarterly loss last month.
LG Display was also recently the center of rights offer rumors, which a company executive flatly denied last month in a meeting with investors.
LG Elec may also be seeking to acquire new growth engines as some of its business lines struggle, Park said.
World No. 2 memory chip maker Hynix is among the firms mooted as possible LG Elec takeover targets.
LG Elec last week reported a wider-than-expected quarterly loss, with its troubled mobile phone division sinking deeper into the red.
Fitch Ratings cut its outlook on the company earlier this month citing recent weak operating results, and said its operational competitiveness was unlikely to recover significantly in the short term.
(Additional reporting by Hyunjoo Jin; Editing by Jonathan Hopfner)