[Courtesy of Kumho Tire]
South Korea's state-run Korea Development Bank rejected a self-rescue package for Kumho Tire as inefficient, suggesting the troubled tire maker should be put under a debt restructuring program to normalize its operation under control by creditors.
The bank would soon convene a meeting of creditors to discuss terms of the restructuring program which requires unanimous approval. Otherwise, Kumho Tire would be put under a more stringent form of debt restructuring or a debt workout program.
The Kumho Asiana Group submitted a self-rescue package after negotiations on finding a new owner for Kumho Tire broke down. China's Doublestar agreed in March to secure a 42.01 percent stake in Kumho Tire, but the deal faltered because of disputes over job security, a price cut and other thorny issues.
The package submitted by Kumho group chairman Park Sam-koo included asset sales and capital increase by March next year. The group reportedly hoped to raise some 630 billion won (557 million US dollars), including the sale of a 4.4 percent stake in Daewoo Engineering & Construction for 130 billion won, a capital increase worth 200 billion won and the disposal of assets in China.
Creditors have expressed doubts about the group's financial ability to bail out the tire unit saddled with a total debt of 2.7 trillion won. Park has been accused of causing Kumo Tire's liquidity crisis with mismanagement.
Kumho Tire with plants in China, Vietnam, and the United States was put under a debt workout program in December 2009 due to a severe liquidity crunch. The company graduated from the program in late 2014, but sales fell sharply in China this year amid a row over a US missile shield.
reporter
Lim Chang-won
cwlim34@ajunews.com
