Update – Details emerging on Impact of Kumho Workout
Even as the debt-laden Kumho Asiana Group continues with its overall corporate restructuring plan, more details are starting to emerge about the fate of its Kumho Tire Co. unit. Both Kumho Tire and sister unit Kumho Industrial have entered a debt “work-out” program with creditors, and the “majority” of those creditors have agreed to freeze debt repayments for three months to allow the companies “time to carry out a planned restructuring programme.”
“It usually takes about four months for creditors to carry out due diligence on a company under debt workout but we (creditors) aim to finish it in two months to speed up Kumho Asiana’s restructuring,” a Korea Development Bank official said. Usually, the official added, a company in a debt workout programme will have to undergo a capital reduction and a debt-for-equity swap. Once the company normalises its business, the creditors then look to sell the company to a third party.
In addition, Kumho Tire will raise 150 billion won (£82.5 million) by selling a 49 per cent stake in Kumho Tire Hong Kong, the holding company of Kumho Tire branches in China and Vietnam. It is not clear to what extent that will impact Kumho tyre plants in those countries. (Tire Review)