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| Park Sam-koo Kumho Asiana Group chairman |
Kumho Asiana Group will give up managerial control of its struggling tire unit if it fails to implement a self-rescue package, it said Thursday.
This was the first time for the cash-strapped business group, headed by Chairman Park Sam-koo, to hint at letting go of Kumho Tire, a move seen as an attempt to pressure company lenders to accept its self-written restructuring plan.
"We will give up managerial control of Kumho Tire if we fail to issue a new rights offering and sell its China business. Chairman Park will also abandon his stake buyback right," a Kumho Group official said.
On Tuesday, Kumho submitted a 730 billion won ($650 million) restructuring package to the state-run Korea Development Bank (KDB) and other creditors. But the lenders were unsatisfied with the package, calling it "insufficient," and plan to hold a meeting early next week to discuss the matter.
Last week, they asked Kumho Group to draw up the self-rescue plan after failing to sell Korea's second-largest tire maker to mid-tier Chinese tire maker, Double Star.
The KDB and other creditors held Park responsible for the botched deal, requiring him to submit a viable restructuring plan. Otherwise, they would take away managerial control from Park and subject Kumho Tire to a workout program by threatening not to extend the firm's 1.3 trillion won in loans, which will mature this month.
"We plan to secure 200 billion won by this year by issuing new company stocks to raise fresh capital," the official said. "We are currently talking with multiple investors to sell the tire maker's three plants in China, valued at 400 billion won. If creditors accept our plan, we will complete the sale by next March. If we cannot keep the promise, we will walk away from Kumho Tire."
The group also plans to raise the remaining 130 billion won by disposing of a 4.4 percent stake in Daewoo Engineering & Construction (E&C) shares.
Kumho Asiana officials said creditors should accept the restructuring plan to get Kumho Tire back on track as soon as possible.
"We believe speed is critical for the company to normalize its operations and improve its financial health. So we are asking creditors to approve the self-rescue package to facilitate the restructuring process," the official said. "We offered the best possible plan under the current circumstances. We will continue to persuade creditors to accept the 720 billion won plan."
In the first six months of 2017, Kumho Tire posted a 50.7 billion won operating loss, compared with a 55.8 billion won operating profit a year ago. As of June, its cash and cash equivalents amounted to only 69.9 billion won, down from 163.5 billion won six months ago.
In December 2014, Kumho Tire finished a creditor-led workout program, four years after suffering a severe liquidity crisis caused by overspending on Kumho Group's acquisition of Daewoo E&C in 2006.
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