Creditors let Kumho keep managerial rights for up to 5 yrs

SEOUL, Dec. 31 (Yonhap) -- Creditors of the cash-strapped Kumho Asiana Group have
allowed the country's ninth-largest family-run conglomerate to maintain
managerial rights over its units for up to five years, even after debt-for-equity
swaps, industry sources said Thursday.

On Wednesday, two key units of the group -- Kumho Industrial Co. and Kumho Tire
Co. -- were put under creditor-led debt restructuring as the group faced a cash
shortage after a series of mergers and acquisitions.
But the group's de facto holding company, Kumho Petrochemical Co., and Asiana
Airlines Inc. should voluntarily conduct "massive and bone-cutting" restructuring
efforts, said the creditors, led by the state-run Korea Development Bank (KDB).
Under the debt restructuring plan, the creditors can convert debts into equity
and provide fresh loans to help improve Kumho Group's financial status. According
to the country's financial regulator, financial companies have 15.7 trillion won
of exposure to Kumho Asiana units.
"We expect the group to put its units on a normalization course within five
years," said an official at KDB. "Its managerial rights will be kept for up to
five years even after debt-for-equity swaps... but the group will have to give up
the reins to the units if they fail to make a turnaround."
Kumho Asiana has been gasping under a massive financial burden from its
acquisition of Daewoo Engineering & Construction Co., the country's
second-largest builder, for more than 6.43 trillion won, having agreed to
repurchase Daewoo Engineering shares held by financial investors at a price far
above current market levels.
It also bought logistics firm Korea Express Co. for 4.1 trillion won in 2008.
Kumho Asiana agreed to sell a controlling stake in Daewoo Engineering for 2.9
trillion won to its main creditor Korea Development Bank to help meet a cash call
from banks.
Kumho will sell its auto rental business to a consortium of KT Corp and private
equity firm MBK for 300 billion won.
sam@yna.co.kr