Korea’s Kumho faces heavy dose of restructuring

By Malini Hariharan

The financially troubled Kumho Asiana group, with assets stretching from petrochemicals to airlines, has finally been able to work out a plan that should satisfy its creditors.

The Korea Herald reports that the group plans to raise $1.13bn by selling assets as part of a restructuring programme. Kumho Tire and Kumho Industrial have been placed under a debt workout programme. Kumho Tire will be selling its stake in its Hong Kong unit.

Korea Kumho Petrochemical, the holding company of the group, will raise $233m by selling treasury shares. Kumho Petrochemical, which manufactures synethetic rubber, polymers, speciality chemicals and electronic chemicals, may also have to sell a power plant.

Asiana Airlines will have to sell stakes in a software company and in Kumho Investment Bank, the financial unit of the group.

The Korean Development Bank, the main creditor, has allowed Kumho Petrochemical Co. and Asiana Airlines more time for debt repayment in return for their pledges to restructure themselves.

But creditor banks have warned that the two units could be put under debt workout if their voluntary restructuring program fails to meet expectations. And the group also risks losing managerial rights if it fails to normalise operations over the next five years.

Kumho Asiana’s restructuring can begin if approved by three fourths of its creditors.

A Seoul-based analyst says he has read a news report that Kumho Asiana may also sell its stake in Kumho P&B, the phenol, bishpenol-A, MIBK and epoxy resin producer. The company is a 78:22 joint venture between the Kumho Asiana and Japan’s Nippon Steel Chemicals. The stake is likely to be offered first to the Japanese partner.

Financial problems at Kumho Asiana, South Korea’s eighth-largest conglomerate, started after a heavily leverage purchase of Daewoo Engineering & Construction in 2006 and Korea Express in 2008.

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