Kumho Asiana Group has requested its creditors to extend 500 billion won (US$439.17 million) worth of loans against the owner family’s entire stake in Kumho Buslines Co., the group’s de facto holding company. The group said it would agree to creditors’ sale of Asiana Airlines if it fails to normalize its operation within three years.
Kumho Asiana Group submitted such a management normalization plan to Korea Development Bank (KDB), its main creditor.
In the recovery plan, the owner family members, including ex-chairman Park Sam-koo, will give their entire stake to creditors as collateral for the loan. These include the 4.8 percent stake, or 133,900 shares, in Kumho Buslines owned by Park’s wife and daughter. Also to be offered as collateral are the 42.7 percent stake in Kumho Buslines owned by Park and his son Park Se-chang, who is president of Asiana IDT Inc., once the family receives it back from Kumho Tire creditors. Currently that 42.7 percent stake is being held by the creditors, including KDB, as collateral for a loan given to Kumho Tire Co., which was sold to China’s Doublestar last year. It means that the group will practically entrust the owner family’s entire stake in Kumho Buslines, which is at the top of the group’s corporate governance structure, to creditors.
Kumho Asiana has agreed to sign a memorandum of understanding (MOU) on financial structure improvement with KDB and receive management appraisal over the next three years. The group has promised to allow the KDB to sell Asiana Airlines if it fails to reach targets set by the creditors within the next three years. The proposal was endorsed by ex-chairman Park, who is a major stockholder in Asiana Airlines, and Kumho Industrial Co., the largest shareholder of the airline.
Kumho Asiana has promised that former chairman Park Sam-koo will not return to management and that the group will sell its assets, including subsidiaries of Asiana Airlines, to pay back the loan. In addition, it will close down non-profitable routes and improve the productivity of the workforce to improve its profitability. The pledges were made in the normalization plan which included a request for financial support of 500 billion won (US$439.17 million). A KDB official said, “We will hold a creditor meeting in the near future to discuss whether to accept the self-rescue plan.”