[THE INVESTOR] Kumho Asiana Chairman Park Sam-koo has given up his executive position and his right of first refusal regarding Kumho Tire, according to Kumho Tire’s main creditor Korea Development Bank on Sept. 26.
“Chairman Park has decided to resign from his management position and give up his right of first refusal to prevent any interference with the business normalization of Kumho Tire,” the bank said in a statement.
An official with Kumho Asiana Group confirmed the statement, saying that the chairman would continue to offer support during the restructuring process.
The statement comes after the creditors’ association holding Kumho Tire decided to reject Kumho Tire’s self-rescue plan submitted earlier this month, which had included measures such as selling the company’s Chinese plant and increasing its shares to raise funds of up to 630 billion won ($554 million).
The self-rescue plan was submitted to creditors after a tentative deal to sell a 42 percent controlling stake in Kumho Tire to Chinese company Qingdao Doublestar fell through due to price disputes after Kumho Tire’s poor performance in the first half of the year.
“When considering effectiveness and practicality, creditors decided that Kumho Tire’s self-rescue plan was insufficient to resolve the company’s current management crisis,” KDB said.
Kumho Tire now faces another restructuring program, just three years after graduating from a debt workout program in December 2014.
The bank said that the creditors would meet again to discuss the details of a restructuring plan under a voluntary restructuring agreement, which allows for a quicker injection of funds than a debt workout program.
The voluntary agreement will put into place emergency support such as postponing the deadline on 1.3 trillion won worth of debt that Kumho Tire is expected to pay back at the end of this month.
However, it is still possible that Kumho Tire will be placed on a workout program instead of a voluntary agreement. A voluntary agreement requires a unanimous vote from the creditors’ association, while a debt workout program only requires a three-fourths vote.
The restructuring process is expected to face pushback from employees of the tire company, which had previously railed against the company’s potential sale to Doublestar as well. On Sept. 25, Kumho Tire’s labor union held a press conference where it said that KDB chief Lee Dong-gull’s call for “shared pain” in normalizing the company’s finances was “unacceptable,” and accused creditors of demanding “unilateral sacrifice” from employees.
By Won Ho-jung/The Korea Herald (firstname.lastname@example.org)