Creditors may not assure Kumho's management rights: KDB chief

SEOUL, Feb. 7 (Yonhap) -- The chief of Korea Development Bank (KDB) warned Sunday
creditors of the financially-troubled Kumho Asiana Group will not guarantee the
group's managerial rights if members of its owner family is unwilling to provide
their stock holdings by a deadline.
The creditors, led by KDB, decided on Dec. 30 to put Kumho Asiana's two key units
-- Kumho Industrial Co. and Kumho Tire Co. -- under a debt rescheduling program
to help the group avert a liquidity crisis after a series of reckless takeover
moves.
But the restructuring of cash-strapped Kumho Asiana Group has been sluggish as
members of the group's owner family have dragged their feet in providing their
stakes in affiliates as collateral to creditors. The group promised creditors to
do so in a bid to shoulder responsibility in exchange for maintaining its
managerial rights over the group.
"Creditors notified the group's family of transferring the right to dispose of
stakes in affiliates to creditor banks by Feb. 7," Min Euoo-sung, chairman of
KDB, told reporters on Saturday.
"We plan to withdraw all promises -- debt rescheduling, the supply of fresh funds
and the guarantee of managerial rights -- if the owning family does not abide by
the deadline."
Kumho Asiana has been riddled with mounting debt after it bought a 72.1 percent
stake in Daewoo Engineering in 2006 for 6.4 trillion won (US$5.47 billion), a
deal mostly funded by financial investors.
Kumho faced a cash call worth around 4 trillion won from financial investors, who
exercised their rights to sell shares in Daewoo Engineering back to the group at
above-market prices. Kumho Industrial, the biggest shareholder of Daewoo
Engineering, must repay the amount by June 15.
A private equity fund led by KDB is seeking to buy a 50 percent stake plus one
share in the construction firm for 18,000 won.
"A big picture of Kumho's turnaround plan will be drawn up by the end of this
month and creditors will seek to complete details by March," Min added.
Also Sunday, Min said U.S. President Barack Obama's recent proposal for tighter
bank regulations, called the "Volcker rule" affected the KDB's decision to pull
out of bidding for a stake in Siam City Bank Plc, Thailand's No. 7 lender.
"If the Volcker rule is approved in Congress, it will significantly affect the
corporate investment bank model, which KDB is targeting," Min said. "KDB plans to
watch how the Volcker rule will develop and its potential impact on the global
markets in crafting out the bank's overseas expansion and privatization plans."
The government plans to reduce its 100 percent stake in KDB Financial Group
within four years to put it in private hands. The group was created in late
October as the holding company for KDB and four other units.
KDB plans to list shares of the holding company on the Seoul bourse in 2011 and
on the New York stock market in 2012 in a bid to accelerate the privatization of
the bank.
sooyeon@yna.co.kr
(END)