Posted : 2018-01-12 16:45
Updated : 2018-01-12 20:10

KDB threatens to scrap Kumho restructuring

By Kim Yoo-chul

The Korea Development Bank (KDB) has threatened to pull out of its support for Kumho Tire, an affiliate of Kumho Group, if Kumho fails to win backing from its labor union over ongoing restructuring efforts.

"Creditors at Kumho Tire are reviewing all options to help the ailing Kumho Group affiliate back on the normal track," KDB said Friday. "But implementation of these options, which we believe is in favor of the unit, is based on how development progress has happened."

KDB is the main creditor of the tire maker. The bank recently set up three task forces aimed at overseeing the progress of the manufacturer's restructuring efforts.

KDB joined with other creditors to apply a series of measures for the tire manufacturer's restructure by the end of 2017. But creditors extended the deadline to the end of January.

Kumho Tire, which has been under creditor control since September last year, has been attempting to downsize for a possible sale.

The management asked the labor union to accept its cost-cutting proposals, which include a 30 percent annual salary cut and unpaid leave.

The management said such measures could help it save as much as 148 billion won out of its total need to save 292 billion won for recovery. But the labor union vetoed the plans.

"We can't accept the proposals. We need shared sacrifice," said a labor union representative, adding they were not paid their monthly checks last month.

Kumho Tire's debt, which was estimated at some 1.9 trillion won, was extended to January 28 in an effort to set up a bailout deal through a debt restructuring process.

Late Friday, Kumho Tire said its top management resumed discussions with labor representatives over restructuring efforts.

"If the two sides fail to reach an agreement, then it's highly likely that Kumho Tire will fall under a court receivership, the scenario that Kumho Tire management doesn't want to see," an official at the group said.

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