By Lee Hyo-sik
Things have turned increasingly unfavorable lately for Kumho Asiana Group Chairman Park Sam-koo, who has been working hard to take back control of the group's holding firm, Kumho Industrial.
Chances were high that Park would likely acquire the troubled builder as he has vowed to buy back a 57.6 percent stake from creditors at any cost.
However, Hoban Construction, which owns 4.95 percent of Kumho Industrial, has made his plan more difficult to achieve because the builder, based in the southwestern Jeolla Province, is willing to pay nearly 1 trillion won ($910 million) for the 57.6 percent stake, much more than the firm's market value of about 810 billion won.
Hoban has become more assertive toward the takeover of Kumho Industrial because whoever owns Kumho Industrial can control Asiana Airlines, thanks to the fact the firm has a 30.1 percent stake in Korea's second-largest flagship carrier, according to industry analysts.
In addition, the Korea Development Bank (KDB) and other creditors are also increasingly unhappy with Chairman Park as he has reportedly been exerting his influence across business circles to lower the value of Kumho Industrial so he can buy back the shares for less money.
Some minority shareholders of Kumho Industrial have filed suit against Park and group executives claiming they manipulated company stock prices to lower the builder's market value so the chairman needs to raise less money.
Park has also been dogged by questions over whether he will be able to secure enough cash to purchase Kumho Industrial, which could cost up to 1 trillion won, including a premium for management rights. Park has a 9.14 percent stake in the company.
Hoban willing to pay 1 trillion won
Creditors plan to hold a final bid on April 28 to select a preferred bidder for Kumho Industrial. Hoban, MBK Partners and three other private equity firms submitted preliminary bids in February.
When the highest bidder is announced, creditors are required to first negotiate with Chairman Park, asking whether he will purchase the shares at the highest bidding price. If he refuses, creditors can then sell their stakes to the highest bidder.
Hoban is widely expected to be the highest bidder, given its chairman's strong will to acquire the troubled builder.
On March 25, Hoban Chairman Kim Sang-yeol told reporters that his company has enough cash to acquire Kumho Industrial. Kim then said he is willing to pay as much as 1 trillion won.
"We completed due diligence on Kumho Industrial last week," a Hoban Construction spokesman said. "We will submit a bid on April 28 to become preferred bidder. It is not a good idea to comment on what we are going to do next because we compete with other bidders."
On top of the Hoban factor, Park is increasingly viewed unfavorably by creditors as he and his associates have moved to lower the value of Kumho Industrial in a bid to make it less costly for the group to buy shares from creditors.
On Tuesday, a minority shareholder surnamed Kang filed a suit with the Seoul Central District Prosecutors' Office against Park and 20 executives for causing financial losses to him and other shareholders. Kang accused group executives of insider trading and stock manipulation.
Earlier, 20 Kumho executives disposed of their combined total of 75,000 shares, which critics argue was designed to reduce the value of Kumho Industrial before the April 28 bid. The value of listed firms is normally measured on stock prices.
KDB and other creditors are expressing displeasure toward Chairman Park, warning him not to engage in any act to disturb the planned final bid.
They said if Park and his associates were found to have disrupted the sales process, they would take away Park's stake purchase rights. Creditors also agreed not to allow the chairman to borrow excessive amounts of money to acquire the shares.
"Park and group executives have never been involved in unfair acts," a Kumho Asiana Group spokesman said. "As we have said before, we will definitely buy back the shares. We cannot disclose how we are going to raise the money. But we will have no problem securing funds."
In December, Kumho Industrial, along with its affiliate Kumho Tire, graduated from a five-year-long, creditor-managed workout program. The two had to subject themselves to the workout scheme under snowballing debt amid the sluggish real estate market following the 2008 global financial crisis.
KDB and other banks that had extended credit to Kumho Asiana Group units converted their debt into equity.
Kumho Asiana Group suffered a severe liquidity crisis in 2009 after it borrowed an excessive amount of money to acquire Daewoo E&C and Korea Express.
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| Park Sam-koo, Kumho Asiana chairman |
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| Kim Sang-yeol, Hoban Construction chairman |
Chances were high that Park would likely acquire the troubled builder as he has vowed to buy back a 57.6 percent stake from creditors at any cost.
However, Hoban Construction, which owns 4.95 percent of Kumho Industrial, has made his plan more difficult to achieve because the builder, based in the southwestern Jeolla Province, is willing to pay nearly 1 trillion won ($910 million) for the 57.6 percent stake, much more than the firm's market value of about 810 billion won.
Hoban has become more assertive toward the takeover of Kumho Industrial because whoever owns Kumho Industrial can control Asiana Airlines, thanks to the fact the firm has a 30.1 percent stake in Korea's second-largest flagship carrier, according to industry analysts.
In addition, the Korea Development Bank (KDB) and other creditors are also increasingly unhappy with Chairman Park as he has reportedly been exerting his influence across business circles to lower the value of Kumho Industrial so he can buy back the shares for less money.
Some minority shareholders of Kumho Industrial have filed suit against Park and group executives claiming they manipulated company stock prices to lower the builder's market value so the chairman needs to raise less money.
Park has also been dogged by questions over whether he will be able to secure enough cash to purchase Kumho Industrial, which could cost up to 1 trillion won, including a premium for management rights. Park has a 9.14 percent stake in the company.
Hoban willing to pay 1 trillion won
Creditors plan to hold a final bid on April 28 to select a preferred bidder for Kumho Industrial. Hoban, MBK Partners and three other private equity firms submitted preliminary bids in February.
When the highest bidder is announced, creditors are required to first negotiate with Chairman Park, asking whether he will purchase the shares at the highest bidding price. If he refuses, creditors can then sell their stakes to the highest bidder.
Hoban is widely expected to be the highest bidder, given its chairman's strong will to acquire the troubled builder.
On March 25, Hoban Chairman Kim Sang-yeol told reporters that his company has enough cash to acquire Kumho Industrial. Kim then said he is willing to pay as much as 1 trillion won.
"We completed due diligence on Kumho Industrial last week," a Hoban Construction spokesman said. "We will submit a bid on April 28 to become preferred bidder. It is not a good idea to comment on what we are going to do next because we compete with other bidders."
On top of the Hoban factor, Park is increasingly viewed unfavorably by creditors as he and his associates have moved to lower the value of Kumho Industrial in a bid to make it less costly for the group to buy shares from creditors.
On Tuesday, a minority shareholder surnamed Kang filed a suit with the Seoul Central District Prosecutors' Office against Park and 20 executives for causing financial losses to him and other shareholders. Kang accused group executives of insider trading and stock manipulation.
Earlier, 20 Kumho executives disposed of their combined total of 75,000 shares, which critics argue was designed to reduce the value of Kumho Industrial before the April 28 bid. The value of listed firms is normally measured on stock prices.
KDB and other creditors are expressing displeasure toward Chairman Park, warning him not to engage in any act to disturb the planned final bid.
They said if Park and his associates were found to have disrupted the sales process, they would take away Park's stake purchase rights. Creditors also agreed not to allow the chairman to borrow excessive amounts of money to acquire the shares.
"Park and group executives have never been involved in unfair acts," a Kumho Asiana Group spokesman said. "As we have said before, we will definitely buy back the shares. We cannot disclose how we are going to raise the money. But we will have no problem securing funds."
In December, Kumho Industrial, along with its affiliate Kumho Tire, graduated from a five-year-long, creditor-managed workout program. The two had to subject themselves to the workout scheme under snowballing debt amid the sluggish real estate market following the 2008 global financial crisis.
KDB and other banks that had extended credit to Kumho Asiana Group units converted their debt into equity.
Kumho Asiana Group suffered a severe liquidity crisis in 2009 after it borrowed an excessive amount of money to acquire Daewoo E&C and Korea Express.
