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| Park Sam-koo Kumho Asiana Group chairman |
By Lee Hyo-sik
Kumho Asiana Group has lost control of its struggling tire unit as Kumho Tire creditors rejected its 730 billion won ($650 million) self-rescue package.
The state-run Korea Development Bank (KDB) and other creditors, which hold a combined 42 percent stake in the cash-strapped tire maker, have decided to strip Kumho Chairman Park Sam-koo of managerial control and subject the firm to a stringent workout program to normalize its operations.
KDB said Tuesday Kumho Tire's restructuring package is "insufficient" to tide over current difficulties, stressing that creditors should be in the driver's seat again to get the company back on track.
"Creditors have decided to take the initiative in normalizing Kumho Tire, given the low feasibility of its self-rescue plan," a KDB official said. "The restructuring package is not enough for the tire maker to overcome the ongoing hardship."
He said Kumho Tire CEO Lee Han-seob and other top managers will resign, adding that Kumho Chairman Park will give up his right to buy back the 42.01 percent stake.
"KDB reached a consensus with Kumho Asiana Group on these and other issues. The group also pledged to allow the Kumho Tire buyer, whoever it may be, to use the Kumho trademark without preconditions," the official said. "Creditors and Kumho Group have also agreed to do their best to get Kumho Tire back on track as quickly as possible."
The KDB and other creditors have been seeking to take control away from Park, holding him responsible for the botched deal with mid-tier Chinese tire maker, Double Star Tires. They viewed Park as the main culprit because he made it difficult for Double Star to use the Kumho trademark after acquiring the tire maker.
The Kumho chief did not dispute KDB's announcement Tuesday, telling reporters, "I will accept the creditors' decision. I have no control over the situation."
Korea's second-largest tire maker will again undergo a creditor-led workout program, three years after the previous one.
In 2010, it was placed under management by KDB and other creditors after suffering a severe liquidity crisis caused by overspending on Kumho Group's acquisition of Daewoo E&C in 2006.
Creditors are expected to extend the tire maker's 1.3 trillion won in loans, which will mature this month. They will also likely inject fresh capital into the company to prop up its deteriorating financial health.
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.
Early this month, Kumho Tire submitted its 730 billion won self-rescue plan that included raising 200 billion won by issuing new company stocks.
The firm also said it would sell the tire maker's three plants in China, valued at 400 billion won, as well as raising the remaining 130 billion won by disposing of a 4.4 percent stake in Daewoo E&C shares.
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