(LEAD) Creditors set to kick off Kumho Asiana debt workout

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SEOUL, Jan. 5 (Yonhap) -- Creditor banks are set to start a debt workout for
Kumho Asiana Group Tuesday, including a debt freeze, in a bid to help the
debt-ridden conglomerate weather its liquidity crisis, according to the lenders.

The creditors including Korea Development Bank plan to hold their first meeting
later in the day to discuss how to reschedule debts for the group's two units --
Korea Kumho Petrochemical Co. and Asiana Airlines Co. The creditors are widely
expected to decide to roll over maturing debts for the two affiliates by the end
of this year.
"Korea Kumho Petrochemical will be put under a creditor-led debt workout,
however, if a restructuring plan to be presented by Kumho group fails to meet
market expectations," a high ranking official at one of the banks said.
Creditors of Kumho Industrial Co. and Kumho Tire Co. are also scheduled to meet
on Wednesday to determine whether to begin a debt rescheduling program. Approval
from three fourths of the banks will immediately lead to a debt freeze for both
companies. They are expected to come up with a final debt-workout plan for both
firms by end-February after conducting a due diligence.
On Dec. 30, the creditor banks agreed with the nation's eight-largest industrial
conglomerate to reschedule debts of Kumho Industrial and Kumho Tire after the
cash-strapped group's efforts to sell Daewoo Engineering & Construction Co. fell
through.
In the same meeting, the lenders allowed Korea Kumho Petrochemical and Asiana
Airlines rights to find their own ways to restructure debts in consultation with
creditor banks.
The financial watchdog estimated the total debts of Kumho group to reach 15.7
trillion won (US$13.7 billion).
The group released earlier in the morning its plan to raise 1.3 trillion by
selling off assets and taking other measures to cut costs, including a 20 percent
reduction in executive positions and wages.
Shares of Kumho affiliates, however, extended their steep falls on the Seoul
bourse as investors scrambled for a massive sell-off.
Kumho Industrial plunged by the daily limit of 15 percent to 6,030 won as of
11:40 a.m., after falling by the limit for the last two sessions.
Kumto Tire also dived by the 15-percent cap to 3,065 won on the Seoul bourse
after trading resumed following one-day suspension due to market speculations.
The company plummeted 15 percent the previous day.
pbr@yna.co.kr
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