By Lee Hyo-sik
The state-run Korea Development Bank and other creditors of Kumho Industrial are in a quandary about what price to dispose of their 57.5 percent stake in the holding company of Kumho Asiana Group.
The creditors have been demanding that Kumho Group pay 1.02 trillion won ($833 million) for the stakes, or 59,000 won per share, including a premium for management rights and the firm’s stakes in other group affiliates.
However, Kumho Chairman Park Sam-koo, who has been trying to rebuild his fallen empire over the past five years, insists that he cannot pay more than 650.3 billion won for the stakes, or 37,564 won per share.
Park has been arguing that creditors have become greedy, seeking to receive more than what Kumho Industrial is worth.
After failing to narrow the price gap with Kumho Group over the past two months, creditors have begun discussing whether to accept or reject Park’s offer.
“We are currently collecting opinions from 22 creditors that own more than a 0.5 percent stake in the company,” a KDB spokesman said. “We are asking about whether they will stick to the 1.02 trillion won price tag, or willing to lower the sales price.”
The spokesman said KDB will try to gather opinions from all creditors by Thursday. “As a main creditor, we have been refraining from voicing our own opinions because our stance could influence other creditors. After collecting opinions, we will inform Kumho Group of our final sales price.”
When informed, Park has to decide within a month whether to exercise the buyback option at the creditor suggested price.
Some creditors are reportedly insisting on receiving no less than 1.02 trillion won from Kumho even if this aborts the sales. But others prefer to quickly dispose of stakes at the Kumho-offered price, stressing that the value of Kumho Industrial could go down further amid deteriorating global economic conditions.
‘No more than 650.3 billion won’
Kumho Asiana Group has been adamant that it cannot pay more than 650.3 billion won, saying that the price includes at least a 45 percent management premium.
“It just makes no sense for creditors to ask us to buy Kumho Industrial at 59,000 won a share when its stock is traded around 16,000 won on the local bourse,” a Kumho Asiana spokesman said. “They should be grateful that we are willing to pay more than what Hoban Construction offered to. Creditors must stop being unreasonable.”
On Tuesday, shares of Kumho Industrial closed 5.84 percent higher at 16,300 won.
In April, creditors held an open bid for Kumho Industrial but only Hoban took part in the bid. The builder said it would buy the 57.5 percent stake for 600.7 billion won or 30,907 won per share, much lower than creditors’ expectations.
After rejecting Hoban’s bid, creditors decided not to hold an open bid and have since been negotiating with Kumho.
The sale of Kumho Industrial has been attracting keen attention from business circles because it is more than just a construction firm. It holds a 30.1 percent stake in Asiana Airlines, Korea's second-largest flagship carrier, and a 46 percent stake in Air Busan, as well as owning Kumho Terminal and the group's headquarters building in downtown Seoul.
In December 2014, 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.