December 31, 2009 12:22
Kumho Tire and Kumho Industrial, the de facto parent companies of the Kumho Asiana Group, have been placed under the control of creditors including Korea Development Bank due to a severe cash crunch. The group's crown jewels Kumho Petrochemical and Asiana Airlines also agreed with creditors to sell assets and take other slimming measures.
Kumho Asiana's purchase of Daewoo Engineering & Construction in 2006 exacerbated cash flow problems, forcing the conglomerate to sell the builder to KDB. Established as a transport company in 1946, Kumho Asiana is Korea's eighth-largest conglomerate with W27 trillion (US$1=W1,165). The current crisis is the worst in its history.
The conglomerate's owner and family headed by honorary chairman Park Sam-koo will keep their jobs but entrust most of their shares in Kumho affiliates, including a 48.5 percent stake in Kumho Petrochemical, to creditors as collateral and relinquish the right to sell them. If the owner family succeed in nursing the group back to health, they get their stakes back and regain their rights. But the conglomerate's debts total W15.7 trillion, which is worth more than half its assets and the second highest debt load in Korean corporate history behind the Daewoo Group, which collapsed under W80 trillion in liabilities in 2001.
Kumho Asiana and creditors announced the restructuring measures on Wednesday after a meeting of board members and creditor representatives. Once the debt workout program starts, Kumho's debt repayment obligations will be waived for three months and creditors will inject cash and ease loan conditions.
- Copyright © Chosunilbo & Chosun.com