Korea Development Bank could halt Kumho restructuring, trigger receivership
Kumho downsizing ahead of sale
Kumho Tire has been attempting to downsize for a possible sale, according to the Korea Times. At the same time, the Korea Development Bank (KDB) is threatening to withdraw support for Kumho Tire unless the tyremaker can agree restructuring terms with its trade unions. And this in turn could trigger receivership.
The newspaper reported KDB representatives as saying: “Creditors at Kumho Tire are reviewing all options to help the ailing Kumho Group affiliate back on the normal track. But implementation of these options, which we believe is in favour of the unit, is based on how development progress has happened.”
Kumho’s management had asked its unions to accept cost-cutting proposals, including a 30 per cent annual salary cut and unpaid leave. The management said such measures could help it save as much as 148 billion won out of its total need to save 292 billion won for recovery. But the union vetoed the plans.
Kumho’s debt is estimated at some 1.9 trillion won.
Kumho said it has resumed restructuring talks with union representatives.