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Park Sam-koo
Kumho Asiana Honorary Chairman |
By Lee Hyo-sik
Staff Reporter
Kumho Asiana Group barely avoided court receivership, after group Honorary Chairman Park Sam-koo and other founding members agreed to offer their stakes in group units as collateral in return for fresh loans, the Korea Development Bank (KDB), the main creditor of the ill-fated group, said Monday.
It added that they also agreed to manage the group's units separately. Under the agreement, Park Chan-koo, former chief of the group's chemical division, will co-run Korea Kumho Petrochemical with his son, while Park Sam-koo will manage Kumho Tire and Kumho Industrial, the bank added.
``If Kumho's owners offer their stakes as collateral, they will be able to keep management control. They have dragged their feet on an asset transfer for a long time, but they finally decided to do so to keep the group under their influence,'' one creditor representative said. Group owners hold stakes in Kumho Petrochemical and other units, worth about 250 billion won.
After family members failed to reach an agreement on how to put forward their properties to creditors by the Feb.7 deadline, the state-run KDB and other banks hinted at taking drastic steps, including putting Kumho Industrial under court receivership, to force the founding family to fulfill their promise.
They even considered placing Kumho Petrochemical, the group's de facto holding firm, under a debt repayment program in a bid to take away management control from the family.
But with Kumho owners pledging to fulfill their promise, KDB and nine other creditors decided Monday to proceed with the initial restructuring scheme of the nation's once-ninth largest conglomerate.
They had previously held a meeting to discuss how to revise Kumho's corporate overhaul program after the founding family members had continued to reject creditor demands.
Under a debt-rescheduling program agreed to late last year, Kumho's major shareholders would keep managerial rights for up to five years, if they complied with the KDB demand.
Creditors put Kumho Industrial and Kumho Tire under the debt repayment program on Jan. 7. Kumho Petrochemical and Asiana Airlines voluntarily signed pacts to undergo self-restructuring.
Banks had initially demanded that Kumho Petrochemical and other key units of the conglomerate be subject to the creditor-led program. But Kumho opposed the measure, saying it would lose managerial control over the entire group if the petrochemical company was put under the influence of creditor banks.
With KDB and other creditors threatening to put Kumho Industrial under court receivership and subjecting Kumho Petrochemical to creditor-led debt rescheduling programs, Kumho family members had no other choice but to give in to their demands because controlling the petrochemical products maker is a must for them to manage the entire group.
Creditors have been warning that they will put the provision of fresh loans to the group on hold and withdraw a guarantee that the Kumho founding family would retain control of its management if they continued to reject to offer stockholdings and other personal assets as collateral.
Min Euoo-sung, CEO of the state-run Korea Development Bank (KDB) ― Kumho's main creditor ― has been demanding that Kumho's owners submit all they have ― except for their houses ― as collateral.
Last week, creditors said the two struggling Kumho affiliates ― Kumho Industrial and Kumho Asiana ― would be provided with 380 billion won in fresh loans as soon as the owner family offered their personal assets as collateral.
They said parts suppliers and other companies doing business with them will face severe financial hardship unless the planned loan provision is made before the Lunar New Year's holiday, which falls on Feb. 14.
Kumho had tried to resolve its cash flow problems by selling Daewoo E&C and other units to strategic investors and implementing self-imposed restructuring measures.
But it faced difficulties in disposing of the builder and had no other choice but to go to the KDB and other creditors late last year, yielding managerial control over the two units in return for fresh capital.
In 2006, Kumho Industrial and Kumho Tire signed a put option deal with 18 financial investors on behalf of the group when it took over Daewoo E&C.
The group promised to buy back shares in the builder on Dec. 15, 2009, if the investors wanted to sell them at a pre-set price of 31,500 won per share in return for a 3-trillion-won investment, expecting that the stock price would hover well above that mark.
The group spent 6.5 trillion won to take over a 72.1 percent stake in Daewoo.
However, the deal went sour as the shares plummeted to below 13,000 won in the aftermath of the global credit crunch late last year, forcing the group to pay the investors an additional 4.2 trillion out of its own pocket.
With the group failing to dispose of the construction company, it had no choice but to turn to KDB for help. Since the two firms entered a creditor-led debt rescheduling program, the put option deal has been turned into bonds.
Creditor banks have decided to buy back stakes held by 18 financial investors at 18,000 won per share, not 31,500 won, and make up for the difference by giving them bonds that will be converted into equity.
leehs@koreatimes.co.kr
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